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MBA - SEMESTER -1

QA I QUESTION BANK

1. Assume that the daily demand for unleaded gasoline at a service station is normally distributed with a mean of

25000 gallons and a standard deviation of 5000 gallons.

a. What are the chances that daily demand will exceed 30000 gallons?

b. What are the chances that the daily demand will be less than 15000 gallons?

c. Between what two amounts would you expect 95% of the daily demands to lie?

2. In a bolt factory, machines A, B, C manufacture 25%, 35%, 40% bolts respectively. Out of these bolts, 5%, 4%,

12% defective ones came from machines A, B, C respectively. Find the probability that a bolt found to be

defective came from machine B

3. Find the equation of the regression line for the following data and compute the residuals

X 15 8 19 12 5

Y 47 36 56 44 21

4. Nine computer-components dealers in major metropolitan areas were asked for their prices on two similar colour

inkjet printers. The results of this survey are given below. At α=0.05, is it reasonable to assert that, on average,

the ABC printer is less expensive than XYZ printer

Dealer 1 2 3 4 5 6 7 8 9

ABC 250 319 285 260 305 295 289 309 275

XYZ 270 325 269 275 289 285 295 325 300

5. The following table gives the number of accounting clerks committing errors and not committing errors between

trained and untrained clerks working in an organization

CLERKS COMMITING ERRORS NOT COMMITING ERRORS TOTAL

Trained 70 530 600

Untrained 155 745 900

Total 225 1275 1500

Test the effectiveness of training in preventing errors. Use 0.05 level of significance (Given chi-square at 1 d.f and

a=0.05 =3.841)

6. The following data show the number of claims processed per day for a group of four insurance company

employees observed for a number of days. Test the hypothesis that the employees’ mean claims per day are all the

same. Use the 0.05 level of significance

Employee 1 15 17 14 12

Employee 2 12 10 13 17

Employee 3 11 14 13 15 12

Employee 4 13 12 12 14 10 9

7. Case Study

Gayatri Machine works is in production of machine tools. It claimed that average life time is 52 days with a variation

of 14 days. Life time (in days) of an engineering component was measured on a sample of 200 units during Oct 2013

to Dec – 2013. Based on the test results, company obtained frequency distribution of life time of components as

shown in table – 1. Due to huge demand in the market, company received a good response and the sales of the

component increased in first half of the year 2014.

Suddenly, during second half of the year 2014, there were complaints about the average quality of the component.

Engineering companies complained that the average quality has gone down and efficiency of the component has also

changed. To verify these claims it was necessary to determine current status of production of the components. For

this, a sample of 200 components was tested for average life time and standard deviation (in days) during July – 2014

Life time days 20-30 30-40 40-50 50-60 60-70 70-80 80-90

No. of components – Dec 2013 15 30 44 60 30 14 07

No. of components – Dec 2014 25 40 60 35 20 15 05

to Sept – 2014. Based on this experiment of testing outgoing quality, following frequency distribution of life time of

components was obtained

(I) Average life time of the components has gone down significantly from Dec – 2013 to Sept – 2014;

(II) Variance of life time of the components has changed significantly from Dec – 2013 to Sept – 2014

Prepare a summary report on average and variance of life time of components. Also write your suggestion based

on this testing experiment

8. Case Study

The following is the Forbes magazine’s list of India’s twenty Billionaires for 2006 titled. Comment on the advisability

of using appropriate measures of location and dispersion including five number summaries for the both the

parameters relating to net worth and age. Any comment about the relationship of age with net worth?

Rank Name Net worth ($billion) Age

1 Lakshami Mittal 20.00 55

2 Azim Premji 11.00 60

3 Mukesh Ambani 7.00 48

4 Anil Ambani 5.50 46

5 Kushal Pal Singh 5.00 74

6 Sunil Mittal 4.90 48

7 Kumar Birla 4.40 38

8 Tulsi Tanti 3.70 47

9 Pallonji mistry 3.30 76

10 Anurag Dikshit 3.10 -

11 Shiv Nadar 3.00 60

12 Shashi Ruia 2.70 62

13 Adi Godrej 2.30 63

14 Anil Agarwal 2.10 52

15 Dilip Shanghvi 2.00 50

16 Naresh Goyal 1.90 56

17 Indu Jain 1.70 -

18 Venugopal Dhoot 1.60 52

19 Malvinder Singh 1.55 -

20 Rahul Bajaj 1.50 67

9. Raju George, executive of customer relations for Apple airline, is studying his company’s overbooking problem.

He is concentrating on the three late night flights out of SVP Airport in Ahmedabad city. In the last year, 5, 6

and 7 percent of the passengers on the Mumbai, Delhi and Goa flights, respectively, have been bumped. Further,

50, 20 and 30 percent of the late night Apple airline passengers at SVP Airport take the Mumbai, Delhi and Goa

flights, respectively. What is the probability that a bumped passenger was scheduled to be on the

A. Mumbai Flight B. Delhi Flight C. Goa Flight

10. Nitrosoft estimated last year that 40 percent of potential software buyers were planning to wait to purchase the

new operating system, Window Mak, until an upgrade had been released. After an advertising campaign to

reassure the public, Nitrosoft surveyed 5000 people and found 1800 who were still unconvinced. At the 5 percent

significance level, can the company conclude the proportion of unconvinced people has decreased?

EDITED BY: PROF. RIDDHI SANGHVI Page 2

11. Ram Patel, a horticulturist at Agriculture university, knows that a certain strain of corn will always produce

between 65 and 155 bushels per acre. For a confidence level of 95 percent, how many 1 –acre samples must be

taken in order to estimate the average production per acre to within ±5 bushels per acre

12. The city bank of Rajkot has recently begun a new credit program. Customers meeting certain credit requirements

can obtain a credit card accepted by participating area merchants that carries a discount. Past number show that

30 percent of all applicants for this card are rejected. Given that credit acceptance or rejection is a Bernoulli

process, out of 15 applicants, what is the probability that

A. Exactly 5 will be rejected? B. Exactly 9 will be rejected? C. Fewer than 2? D. More than 12

13. The India customs agency routinely checks all passengers arriving from foreign countries as they enter the India.

The department reports that the number of people per day found to be carrying smuggled goods as they enter

India through SVP airport in Ahmedabad averages 40 and has a standard deviation of 10. What is the probability

that in 6 days at the airport, the average number of passengers found carrying smuggled goods will exceed 54?

14. ABC distributing company hypothesizes that a phone calls is more effective than an E –mail in speeding up

collection of slow accounts. Two groups of slow accounts were contacted, one by each method, and the length of

time between making the call or sending the E-mail and the receipt of payment was recorded

E mail 10 8 9 11 11 14 10

Phone call 7 4 5 4 8 6 9

At α=0.05, should ABC conclude that slow accounts are collected more quickly with calls than with E-mail

15. During recent tennis matches, Dipika has noticed that her lobs have been less than totally effective because her

opponents have been returning more of them. Some of the people she plays are quite tall, so she was wondering

whether the height of her opponents could be used to explain the number of lobs not returned during a match.

The following data were collected from five recent matches

Opponent’s height (H) Unreturned Lobs (L) A. Which variable is the dependent variable?

5 feet 9 B. What is the least squared estimating

5.5 feet 6 equation for these data?

6 feet 3 C. What is your best estimate of the number of

6.5 feet 0 unreturned lobs in her match tomorrow with an

5 feet 7 opponent who is 5.6 feet tall?

16. An investor is interested in seeing whether there are significant differences in the rates of returns on stocks,

bonds, gold, silver, real estate and mutual funds. He has taken random samples of each type of investment and

has recorded the following data

Stock 10 12 15 12 11 17 A. State the null and alternate hypothesis

Bond 6 9 8 9 11 B. Test your hypothesis at the 0.05 significance

Gold 15 20 4 20 10 12 level

Silver 8 12 11 14 15 20 15

Real estate 12 15 20 12 11 14

Mutual fund 20 25 23 24 20 22

17. Satyam department store has been the target of many shoplifters during the past month, but owing to increased

security precautions, 250 shoplifters have been caught. Each shoplifter’s gender is noted; also noted is whether the

shoplifter was a first time or repeat offender. The data are summarized in the table.

Gender First time offender Repeat offender

Male 60 70

Female 44 76

104 146

Assuming that a shoplifter is chosen at random, find

(a) The probability that the shoplifter is male.

(b) The probability that the shoplifter is first time offender, given that the shoplifter is male.

(c) The probability that the shoplifter is female, given that the shoplifter is a repeat offender.

(d) The probability that the shoplifter is female, given that the shoplifter is a first time offender.

(e) The probability that the shoplifter is both male and a repeat offender. 7MARKS

18. Explain the various reasons for taking sample. Also explain different techniques of random sampling. 7MARKS

19. Suppose that, for every lot of 100 computer chips a company produces, an average of 1.4 is defective. Another

company buys many lots of these chips at a time, from which one lot is selected randomly and tested for defects. If the

tested lot contains more than three defects, the buyer will reject all the lots sent in that batch. What is the probability

that the buyer will accept the lots?

20. Mr. Tejas Shah is the supervisor for the Narmada Dam. Mr. Shah knows that the dam’s turbines generate electricity at

the peak rate only when at least 10,00,000 gallons of water pass through the dam each day. He also knows, from past

experience, that the daily flow is normally distributed, with the mean equal to 8,50,000 gallons and standard deviation

of 2,00,000 gallons. What is the probability that the turbines will generate at peak rate today? 7MARKS

21. The average commission charged by full-service brokerage firms on a sale of common stock is Rs. 144, and standard

deviation is Rs. 52. Mr. Shah has taken a random sample of 121 trades by his clients and determined that they paid an

average commission of Rs. 151. At a 0.10 significance level, can Mr. Shah conclude that his clients’ commissions are

higher than the industry average? 7MARKS

22. A consumer-research organization routinely selects several car models each year and evaluates their fuel efficiency. In

this year’s study of two similar subcompact models from two different automakers, the average gas mileage for 12

cars of brand A was 27.2 miles per gallon, and the standard deviation was 3.8 mpg. The nine brand B cars that were

tested average 32.1 mpg, and the standard deviation was 4.3 mpg. At α= 0.01, should it conclude that brand A cars

have lower average gas mileage than do brand B cars?

23. An innovator in the motor-drive industry felt that its new electric motor drive would capture 48 percent of the regional

market within 1 year, because of the product’s low price and superior performance. There are 5000 users of motor

drives in the region. After sampling 10 percent of these users a year later, the company found that 43 percent of them

were using the new drives. At significance level of 1 percent, should we conclude that the company failed to reach its

market-share goal? 7MARKS

24. Compute a one-way ANOVA on the following data.

1 2 3 4

113 120 132 122

121 127 130 118

117 125 129 125

110 129 135 125

Determine the observed F value. Compare the observed F value with the critical table F value and decide whether to reject

the null hypothesis. Use a 1% level of significance. 7MARKS

25. Use the following data and α=.01 to determine whether the observed frequencies represent a uniform distribution.

Category 1 2 3 4 5 6 7 8

F0 19 17 14 18 19 21 18 18

7MARKS

26. Explain coefficient of determination.

27. A corporation owns several companies. The strategic planner for the corporation believes dollars spent on advertising

can to some extent be predictor of total sales dollars. As an aid in long-term planning, she gathers the following sales

and advertising information from several of the companies for 2002. ($ millions). Develop the equation of the simple

regression line to predict sales from advertising expenditures using these data. 7MARKS

Advertising 12.5 3.7 21.6 60.0 37.6 6.1 16.8 41.2

Sales 148 55 338 994 541 89 126 379

29. Explain expected value of perfect information in decision making. 7MARKS

30. As a fund-raiser for a student organization, some students have decided to sell individual pizzas outside the Union on

Friday. Each pizza will sell for Rs. 1.75 and costs the organization Rs. 0.77. Historical sales indicated that between 55

and 60 dozen pizzas will be sold with the probability distribution given below:

Dozens of pizzas 55 56 57 58 59 60

Probability 0.15 0.20 0.10 0.35 0.15 0.05

To maximize the profit contribution, how many pizzas should be ordered? Assume pizzas must be ordered by the dozen.

What is the expected value of perfect information in this problem? What is the maximum amount the organization would

be willing to pay for perfect information?

31. The Indian department of the interior release figures on mineral production. Following are the 10 leading states in non

fuel mineral production in the India. 7 MARKS

State Gujarat Bihar MP Goa Maharastra Assam AP Sikkim Rajasthan UP

Value (Rs.millions) 3350 2800 2550 2050 1920 1670 1660 1570 1420 1320

II. Calculate the range, Interquartile range, mean absolute deviation, sample variance & sample standard deviation.

32. Suppose that 5 men out of 100 and 25 women out of 1000 are colour blind. A colour blind person is chosen at

random. What is the probability of his being male (assuming that males and females are in equal proportion)?

5MARKS

33. Why do we use n-1 as the denominator instead of n to calculate sample variance? 2MARKS

35. Characteristics of good sample. 2MARKS

36. Concert pianist Priyank has become quite upset at the number of coughs occurring in the audience just before he

begins to play. On his latest tour, Priyank estimates that on average eight coughs occur just before the start of his

performance. Mr. Priyank has sworn to her conductor that if he hears more than five coughs at tonight’s performance,

he will refuse to play. What is the probability that he will play tonight? 5MARKS

37. Differentiate coefficient of correlation & coefficient of determination. 2MARKS

38. In an industry a managing director is to be appointed from three persons X, Y, and Z. The chance of selection of X is

twice than that of Y, while the chance of selection of Y is twice than that of Z. The probabilities that these persons, if

selected as managing director will increase the bonus of the workers are respectively 0.2, 0.3 and 0.4. If the bonus has

increased in the industry, find probability that X is selected as managing director. 7MARKS

39. Suppose that in past years the average price per square foot for warehouses in the India has been Rs 32.28. A national

real estate investor wants to determine whether that figure has changed now. The investor hires a researcher who

randomly samples 19 warehouses that are for sale across the India and finds that the mean price per square foot is Rs

31.67, with a standard deviation of Rs 1.29. If the researcher uses a 5% level of significance, what statistical

conclusion can be reached? What are the hypotheses? 7MARKS

40. A management consulting company presents a three-day seminar on project management to various clients. The

seminar is basically the same each time it is given. However, sometimes it is presented to high-level managers,

sometimes to midlevel managers, and sometimes to low-level managers. The seminar facilities believe evaluations of

the seminar may vary with the audience. Suppose the following data are some randomly selected evaluation scores

from different levels of managers who attended the seminar. The ratings are on a scale from 1 to 10, with 10 being the

highest. Use a one-way ANOVA to determine whether there is a significant difference in the evaluations according to

manager level. Assume α = 0.05. Discuss the business implications of your findings. 7MARKS

Higher level Middle level Lower level

7 8 5

7 9 6

8 8 5

7 10 7

9 9 4

10 8

8

41. Students Against Drunk Driving has targeted seat-belt usage as a positive step to reduce accidents and injuries. Before

a major campaign at one high school, 44 percent of 150 drivers entering the school parking lot were using their seat

belts. After the seat-belt awareness program, the proportion using seat belts had risen to 52 percent in a sample of 200

vehicles. At a 0.04 significance level, can the students conclude that their campaign was effective? 7MARKS

42. The following data show the number of claims processed per day for a group of four insurance company employees

observed for a number of days. Test the hypothesis that the employees’ mean claims per day are all the same. Use the

0.05 level of significance. 7MARKS

Employee 1 15 17 14 12

Employee 2 12 10 13 17

Employee 3 11 14 13 15 12

Employee 4 13 12 12 14 10 09

43. Is the transportation mode used to ship goods independent of type of industry? Suppose the following contingency

table represents frequency counts of types of transportation used by the publishing and the computer hardware

industries. Analyze the data using the chi-squre test of independence to determine whether type of industry is

independent of transportation mode. Let α = 0.05. 7MARKS

Transportation mode

Air Train Truck

Publishing

32 12 41

Industry

Industry Computer

05 06 24

Hardware

44. Campus Stores has been selling the Believe it or not : wonders of statistics study guide for 12 semesters and would

like to estimate the relationship between sales and number of sections of elementary statistics taught in each semester.

The following data have been collected: 7MARKS

Sales (units) 33 38 24 61 52 45

No. of sections 03 07 06 06 10 12

Sales (units) 65 82 29 63 50 79

No. of sections 12 13 12 13 14 15

2. Calculate the sample coefficient of determination and the sample coefficient of correlation

45. Study the MINITAB regression output that follows. How many predictors are there? What is the equation of the

regression model? Find out the strength of the model and the predictors. 4MARKS

MINITAB Output

Regression Analysis: Y versus X1, X2, X3, X4

The regression equation is

Y = -55.9 + 0.0105 X1 – 0.107 X2 + 0.579 X3 – 0.870 X4

Predictor coef SE coef T P

Constant -55.93 24.22 -2.31 0.025

X1 0.01049 0.02100 0.50 0.619

X2 -0.10720 0.3503 -3.06 0.003

X3 0.57922 0.07633 7.59 0.000

X4 -0.8695 0.1498 -5.81 0.000

S = 9.025 R-sq = 80.2% R-sq(adj) = 783.7%

46. Write a short note on Multicollinearity. 3MARKS

47. The following information has been gathered from a random sample of apartment renters in a city. We are trying to

predict rent (in dollars per month) based on the size of the apartment (number of rooms) and the distance from

downtown (in miles.) 7MARKS

No. of Rooms 2 6 3 4 3 1

Distance from Downtown 1 1 2 3 10 4

1. Calculate the least-squares equation that best relates these three variables.

2. If someone is looking for a two-bedroom apartment 2 miles from downtown, what rent should he expect to pay?

48. Give Mean and Standard Deviation of Uniform, Binomial and Poisson distributions. 3MARKS

49. Write ‘Hypergeometirc Distribution’ formula and explain its all notations. Write its 5 characteristics. 4 Marks

Sample Size Mean Sum of squares of deviations from their respective means

I 10 12 120

II 12 13 144

Can the two samples be regarded as drawn from the same normal population? 7MARKS

51. According to the Association of Insurance Commissioners, the average annual cost for automobile insurance in a state

is Rs. 691. Suppose automobile insurance costs are uniformly distributed in the state with a range of from Rs. 200 to

Rs. 1,182. What is the standard deviation of the uniform distribution? What is the height of the distribution? What is

the probability that a person’s annual cost for automobile insurance in the state is between Rs. 410 and Rs. 825?

53. Write note on: Using the computer for Multiple Regression.

54. Using the following data obtain the equation of regression line. 7 Marks

X 22 21 28 8 20

Y 17 15 22 19 24

55. A small independent physicians’ practice has three doctors. Dr. Shah sees 41% of the patients, Dr. Patel sees 32%,

and Dr. Jadeja sees the rest. Dr. Shah request blood test on 5% of her patients, Dr. Patel request blood test on 8% of

his patients, and Dr. Jadeja request blood test on 6% of her patients An Auditor randomly selects a patient from past

week and discovers that patient had a test as a result of the physician visit. Knowing this information, what is the

probability that the patient saw Dr. Patel? For what percentage of all patients at this practice are blood tests requested?

56. A small fruit merchant has got a problem on hand. He has to decide how many dozens of particular type of fruit to

stock on a given day. Total demand per day is uncertain. He has analyzed the past data and found the following

pattern of distribution based on 360 days.

Total demand per day ( in dozens) # of days each demand Level was recorded Probability of demand

25 72 0.20

30 90 0.25

35 108 0.30

40 90 0.25

Fruits not sold on any day perish and have to be thrown out. Selling price of the fruit per dozen is 30. Cost of procurement

and other incidentals add to 20 per dozen. How many dozens per day should the merchant stock? 7Marks

57. It is sometimes maintained that women sleep less soundly after having children than they did beforehand. Suppose we

asked 90 women with children, and found. What inference can be drawn from the following table? 7Marks

Present sleep compared with before having children

Number of children

Worse Same Better

1 28 7 5

2 13 6 6

3 or more 8 9 8

58. From the following data, apply one-way ANOVA. 7Marks

Treatment Level

1 2 3

22 21 22

21 17 24

18 16 22

19 18 21

59. What is the meaning of Standard deviation? Explain why the standard deviation is the preferred and tool? 7Marks

60. The XYZ magazine is studying the sales of the magazines 25 towns in Gujarat. The data has compiled in the

following frequency distribution. The management wants to know the answers for the following questions, from the

following table:

Sales(000) 0 - 5000 5000 – 10000 10000 – 15000 15000 – 20000 20000 – 25000

Frequency 2 6 10 5 2

ii. How much variability is there in terms of sales in different towns?

61. What is Baye’s theorem? What is its importance in the business? 7Marks

62. Two sets of candidates are competing for the positions on the board of directors of a company. The probability that

the first set and the second set will win are 0.6 and 0.4 respectively. If the first set wins, the probability of introducing

a new product is 0.8 and the second set wins is 0.3. What is the probability that the new product will be introduced?

63. What is multiple regression? How Multicollinearity problem will arise? 7Marks

64. A hair stylist has been in a business one year. Sixty percent of his customers are walk in business. If he randomly

samples eight of the people from last week’s list of customers, what is the probability that three or fewer were walk

ins? If this outcome actually occurred, what would be some of explanations for it?

65. Explain the following terms giving salient features. 7Marks

(1) Uniform Distribution (2) Standard Error (3) Goodness -of – Fit test

66. On Monday mornings, The First National Bank only has one teller window open for deposits and withdrawals.

Experience has shown that the average number of arriving customers in a 4- minute interval on Monday mornings is

2.8, and each teller can serve more than the number efficiently. The random arrivals at this bank on Monday mornings

are Poisson distribute.

a. What is the probability that on a Monday morning exactly six customers will arrive in 4 – minute interval?

b. What is the probability that five or more customers will arrive at the bank during 8 – minute period? 7Marks

67. What is Type I and Type II error? Explain with examples 7Marks

68. A company is considering two different TV advertisements for promotion of a new product. Management believes

that advertisement A is more effective than advertisement B. Two identical test market areas are selected. A random

sample of 60 customers who saw advertisement A, 18 tried the product. A random sample of 100 customers who saw

advt. B, 22 tried the product. Does this indicate that advertisement A is more effective than advertisement B, if a 5%

level of significance is used?

69. To study the effects of inflation on stock market a researcher takes the P/E ratios of 9 companies for the year 2004 and

the same 9 companies for the year 2005. 7Marks

COMPANY 1 2 3 4 5 6 7 8 9

P/E ratio 2004 8.9 38.1 43 34 34.5 15.2 20.3 19.9 61.9

P/E ratio 2005 12.7 45.4 10 27.2 22.8 24.1 32.3 40.1 106.5

Using the above records you are required to give your opinion regarding effect of inflation on the P/E ratio based on

testing of hypothesis.

70. The manager of a leading publication, using the results of a survey, expects that rating given by the readers should be

as given below. (1) excellent 8% (2) pretty good 47% (3) only fair 34% (4) poor 11%

In order to verify the truth value of the % given above, a researcher conducts a survey and the corresponding results are as

follows:

Rating Frequency

(1) Excellent 21

(2) Pretty good 109

(3) Only Fair 62

(4) Poor 15

Does this observed reading agree with the manager’s expectations? [Take level of significance = 0.05