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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
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

You are required to test the following claims at 1% level of significance:

(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?
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
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

28. Write a short note on Multicollinearity. 7MARKS


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

I. Calculate the mean, median & mode.

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

34. State chebyshev’s theorem 5MARKS

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
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
32 12 41
Industry Computer
05 06 24

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

1. Develop the estimating equation that best fits the data.

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
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

Rent ($) 360 1000 450 525 350 300

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

50. Two independent samples provided the following results:

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?

52. What is ‘Test of Independence’? 2MARKS

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

i. What is the overall average sales figure of the magazine?

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
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