1. The fill amount of bottles of a soft drink is normally distributed, with a mean of 1.

0 liters and
a standard deviation of 0.025 liter. If you select a random sample of 25 bottles,

X i ~ N    1,   0.025  , i  1, 2,..., 25.

  0.025 
 X ~ N    1,   0.005 
 n 25 
X 1
 ~ N  0,1
0.005

The probability that the sample mean will be,

a. between 0.99 and 1.0 liters?

 0.99  1 X  1 1  1 
P  0.99  X  1  P    
 0.005 0.005 0.005 
 P  2  Z  0 
   0     2 
 0.5  0.02275
 0.47725

b. below 0.98 liters?

 X  1 0.98  1 
P  X  0.98   P   
 0.005 0.005 
 P  Z  4 
   4 
 0.00003

c. greater than 1.01 liters?

 X  1 1.01  1 
P  X  1.01  P   
 0.005 0.005 
 P  Z  2
 1  P  Z  2
 1    2
 1  0.97725
 0.02275
d. The probability is 99% that the sample mean amount of soft drink will be at least how much?

Find x such that P  X  x   0.99

 X 1 x 1 
 P    0.99
 0.005 0.005 
 x 1 
 PZ    0.99   I 
 0.005 
We know that for a standard normal random variable Z ,
P  Z  2.576   0.99   II 
x 1
From  I  &  II    2.576  x  0.98712
0.005

e. The probability is 99% that the sample mean amount of soft drink will be between which two
values (symmetrically distributed around the mean)?

P  2.576  Z  2.576   0.99

 X 1 
P  2.576   2.576   0.99
 0.005 
P  0.01288   X  1  0.01288  0.99
P 0.98712  X  1.01288  0.99

Therefore, the sample mean amount of soft drink will be between (0.98712, 1.01288).

2. The branch manager of an outlet (Store 1) of a nationwide chain of pet supply stores wants to
study characteristics of her customers. In particular, she decides to focus on two variables: the
amount of money spent by customers and whether the customers own only one dog, only one cat,
or more than one dog and/or cat. The results from a sample of 80 customers are as follows:
• Amount of money spent: 𝑋̅ = £25.34, s = £8.22
• 47 customers own only a dog.
• 26 customers own only a cat.
• 7 customers own more than one dog and/or cat.
a. Construct a 95% confidence interval estimate for the population mean amount spent in the pet
supply store.

The following MINITAB output shows the 95% confidence interval estimate for the population
mean amount spent in the pet supply store.

Therefore, the required 95% confidence interval is (23.5107, 27.1693).

b. Construct a 90% confidence interval estimate for the population proportion of customers who
own only a cat.

The following MINITAB output shows the 90% confidence interval estimate for the population
proportion of customers who own only a cat.

Therefore, the required 95% confidence interval is (0.238866, 0.411134).

The branch manager of another outlet (Store 2) wishes to conduct a similar survey in his store.
The manager does not have access to the information generated by the manager of Store 1.
Answer the following questions:
c. What sample size is needed to have 95% confidence of estimating the population mean
amount spent in this store to within ±£1.50 if the standard deviation is estimated to be £9?

Here, Margin of error  E   1.5, Confidence level 1     0.95

Population Standard deviation    9
 Z 2 at 95% confidence  1.96

 Z 2   1.96  9 
2 2

Sample size  n        138.3  139

 E   1.5 
Therefore, the required sample size is 139.
d. How many customers need to be selected to have 90% confidence of estimating the population
proportion of customers who own only a cat to within ±0.045?

Here, Margin of error  E   0.045, Confidence level 1     0.90

Estimate of the population proportion  pˆ   0.5
 Z 2 at 90% confidence  1.645
2
 Z 2 
2
 1.96 
Sample size  n     pˆ 1  pˆ      0.5  0.5   474.3  475
 E   0.045 
Therefore, the required sample size is 475.

e. Based on your answers to (c) and (d), how large a sample should the manager take?

Considering the values obtained in (c) and (d), manager should take a sample of size at least 475
to satisfy both the conditions.

3. An auditor for a government agency is assigned the task of evaluating reimbursement for
office visits to physicians paid by Medicare. The audit was conducted on a sample of 100 of the
reimbursements, with the following results:
• In 12 of the office visits, there was an incorrect amount of reimbursement.
• The amount of reimbursement was 𝑋̅ = £73.70, s = £30.55.
a. At the 0.05 level of significance, is there evidence that the population mean reimbursement
was less than £80?

H 0 :   80
H A :   80
  0.05

The following MINITAB output shows the output of one sample t-test for significance of
hypothetical population mean.
Test Statistic, t = –2.06

P-value = 0.026

Since P-value < 0.05, we have to reject the null hypothesis.

Therefore, at 5% level the sample provides enough evidence to support the claim that the
population mean reimbursement was less than £80.

b. At the 0.05 level of significance, is there evidence that the proportion of incorrect
reimbursements in the population was greater than 0.10?

H 0 : p  0.10
H A : p  0.10
  0.05

The following MINITAB output shows the output of one proportion z-test for significance of
hypothetical population proportion.

Test Statistic, z = 0.67

P-value = 0.252

Since P-value > 0.05, we fail to reject the null hypothesis.

Therefore, at 5% level the sample provides not enough evidence to support the claim that the
proportion of incorrect reimbursements in the population was greater than 0.10.

c. Discuss the underlying assumptions of the test used in (a).

The assumptions for a t-test are (i) The sample should be drawn randomly from a normal
population. (ii) Population standard deviation is unknown.
d. What is your answer to (a) if the sample mean equals £80?

Test Statistic, t = 0.00

P-value = 0.500

Since P-value > 0.05, we fail to reject the null hypothesis.

Therefore, at 5% level the sample provides not enough evidence to support the claim that the
population mean reimbursement was less than £80.

e. What is your answer to (b) if 14 office visits had incorrect reimbursements?

Test Statistic, z = 1.33

P-value = 0.091

Since P-value > 0.05, we fail to reject the null hypothesis.

Therefore, at 5% level the sample provides not enough evidence to support the claim that the
proportion of incorrect reimbursements in the population was greater than 0.10.
4. Do male and female students study the same amount per week? In 2007, 58 sophomore
business students were surveyed at a large university that has more than 1,000 sophomore
business students each year. The file StudyTime contains the gender and the number of hours
spent studying in a typical week for the sampled students.
a. At the 0.05 level of significance, is there a difference in the variance of the study time for male
students and female students?

H 0 :  12   22
H A :  12   22
  0.05

The following MINITAB output shows the output of F-test for significance of the difference
between two population variances.

Test Statistic, F = 1.12

P-value = 0.749

Since P-value > 0.05, we fail to reject the null hypothesis.

Therefore, at 5% level the sample provides enough evidence to support the claim that there is a
difference in the variance of the study time for male students and female students.

b. Using the results of (a), which t test is appropriate for comparing the mean study time for male
and female students?

Since the two population variances are equal, we have to use independent two samples t test with
equal population variances for comparing the mean study time for male and female students.

c. At the 0.05 level of significance, conduct the test selected in (b).

H 0 : 1   2
H A : 1   2
  0.05
The following MINITAB output shows the output of independent samples t-test with equal
population variances for significance of the difference between two population means.

Test Statistic, t = 3.68

P-value = 0.001

Since P-value < 0.05, we have to reject the null hypothesis.

Therefore, at 5% level the sample provides enough evidence to support the claim that there is a
difference in the mean of the study time for male students and female students.

d. Write a short summary of your findings.

To study whether male and female students study the same amount per week or not, a survey was
conducted a study on sophomore business students at a large university. Data collected from the
sample of 38 male students and 20 female students.

First to check the variability among these study times are homogenous or not conducted a F-test.

It yielded a conclusion that there is no significant difference between the variances of study time
of males and females.

Then performed a independent two-sample t-test with equal population variances to check
whether the mean study time of males and females vary.

It yielded a conclusion that there is a significant difference between the mean study time of
males and females.
5. The per-store daily customer count (i.e., the mean number of customers in a store in one day)
for a nationwide convenience store chain that operates nearly 10,000 stores has been steady, at
900, for some time. To increase the customer count, the chain is considering cutting prices for
coffee beverages. The question to be determined is how much to cut prices to increase the daily
customer count without reducing the gross margin on coffee sales too much. You decide to carry
out an experiment in a sample of 24 stores where customer counts have been running almost
exactly at the national average of 900. In 6 of the stores, the price of a small coffee will now be
$0.59, in 6 stores the price of a small coffee will now be $0.69, in 6 stores, the price of a small
coffee will now be $0.79, and in 6 stores, the price of a small coffee will now be $0.89. After
four weeks of selling the coffee at the new price, the daily customer count in the stores was
recorded and stored in CoffeeSales.
a. At the 0.05 level of significance, is there evidence of a difference in the daily customer count
based on the price of a small coffee?

H 0 : 1  2  3  4
H A : At least two of the four prices differ in mean daily customer counts.
  0.05

The following MINITAB output shows the output of ANOVA for testing the homogeneity of the
mean daily customer count of given 4 prices.
Test Statistic, F = 104.33

P-value = 0.000

Since P-value < 0.05, we have to reject the null hypothesis.

Therefore, at 5% level the sample provides enough evidence to support the claim that there is an
evidence of a difference in the daily customer count based on the price of a small coffee.

b. If appropriate, determine which prices differ in daily customer counts.

To compare which prices differ in daily customer counts performed a Tukey’s multiple
comparisons test. The MINITAB output is shown below:

The output indicates that all the four price levels differ significantly with one another in mean
daily customer counts.
c. At the 0.05 level of significance, is there evidence of a difference in the variation in daily
customer count among the different prices?

H 0 :  12   22   32   42
H A : At least two of the four prices differ in variance of daily customer counts.
  0.05

The following MINITAB output shows the output of Levene’s test for testing the homogeneity
of the variances of daily customer count of given 4 prices.

Test Statistic = 0.57

P-value = 0.642

Since P-value > 0.05, we fail to reject the null hypothesis.

Therefore, at 5% level the sample provides not enough evidence to support the claim that there is
an evidence of a difference in the variation in daily customer count among the different prices.

d. What effect does your result in (c) have on the validity of the results in (a) and (b)?

The process of ANOVA and post hoc tests for pairwise comparisons are valid only when all the
populations under study have equal variances. Otherwise these processes give ambiguous results
so that conclusion from one procedure doesn’t confirm from that of the other.

In this case we obtained through Levene’s test that the variances are identical for all the 4 price
levels. So the results obtained in parts (a) and (b) are valid.