IS 310

Business
Statistic
s
CSU
Long Beach

IS 310 Business Statistics

Inferences on Two Populations

In the past, we dealt with one population mean
and one population proportion. However, there
are situations where two populations are
involved dealing with two means.
Examples are the following:
O We want to compare the mean salaries of male and
female graduates (two populations and two means).
O We want to compare the mean miles per gallon(MPG) of
two comparable automobile makes (two populations and
two means)

IS 310 Business Statistics

Statistical Inferences About Means

and Proportions with Two Populations

Inferences About the Difference Between

Two Population Means: 1 and 2 Known

Inferences About the Difference Between

Two Population Means: 1 and 2 Unknown

IS 310 Business Statistics

Inferences About the Difference Between

Two Population Means: 1 and 2 Known

Interval Estimation of 1 2

Hypothesis Tests About 1 2

IS 310 Business Statistics

Estimating the Difference Between

Two Population Means
Let 1 equal the mean of population 1 and 2
equal
the difference
mean of population
2. two population
The
between the
means is
1 - 2.
To
estimate 1 - 2, we will select a simple
random
sample of size n1 from population 1 and a
simple
Let x1 equal the mean of sample 1x2and
random
equal
thesample of size n2 from population 2.
mean
of sample
2. of the difference between
The
point
estimator
x1 x2
the
means of the populations 1 and 2 is
.

IS 310 Business Statistics

Sampling Distribution of

x1 x2

Expected Value
E ( x1 x2 ) 1 2

Standard Deviation (Standard Error)

x1 x2

12 22

n1 n2

where: 1 = standard deviation of population 1

2 = standard deviation of population 2
n1 = sample size from population 1
n2 = sample size from population 2
IS 310 Business Statistics

Interval Estimation of 1 - 2:
1 and 2 Known

Interval Estimate

x1 x2 z / 2

12 22

n1 n2

where:
1 - is the confidence coefficient

IS 310 Business Statistics

Interval Estimation of 1 - 2:
1 and 2 Known

Example: Par, Inc.

Par, Inc. is a manufacturer

of golf equipment and has
developed a new golf ball
that has been designed to
provide extra distance.
In a test of driving distance using a
mechanical
driving device, a sample of Par golf balls was
compared with a sample of golf balls made by
Rap,
Ltd., a competitor. The sample statistics appear
on the
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Interval Estimation of 1 - 2:
1 and 2 Known

Example: Par, Inc.

Sample Size
Sample Mean

Sample #1 Sample #2
Par, Inc.
Rap, Ltd.
120 balls
80 balls
275 yards
258 yards

Based on data from previous driving distance

tests, the two population standard deviations are
known with 1 = 15 yards and 2 = 20 yards.

IS 310 Business Statistics

Interval Estimation of 1 - 2:
1 and 2 Known

Example: Par, Inc.

Let us develop a 95% confidence interval
estimate
of the difference between the mean driving
distances of
the two brands of golf ball.

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Estimating the Difference Between

Two Population Means
Population 1
Par, Inc. Golf Balls
11 = mean driving
distance of Par
golf balls

Population 2
Rap, Ltd. Golf Balls
22 = mean driving
distance of Rap
golf balls

m1 2 = difference between
the mean distances
Simple random sample
of n11 Par golf balls

Simple random sample

of n22 Rap golf balls

x11 = sample mean distance

for the Par golf balls

x22 = sample mean distance

for the Rap golf balls

x1 - x2 = Point Estimate of
m1 2
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11

Point Estimate of 1 - 2
Point estimate of 1 2x=
1 x2
= 275 258
= 17 yards
where:
1 = mean distance for the population
of Par, Inc. golf balls
2 = mean distance for the population
of Rap, Ltd. golf balls

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Interval Estimation of 1 - 2:
1 and 2 Known
x1 x2 z / 2

12 22
(15) 2 ( 20) 2

17 1. 96

n1 n2
120
80

17 + 5.14 or 11.86 yards to 22.14 yards

We are 95% confident that the difference between

the mean driving distances of Par, Inc. balls and Rap,
Ltd. balls is 11.86 to 22.14 yards.

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Hypothesis Tests About 1 2:

1 and 2 Known
Hypotheses

H 0: 1 2 D0 H 0: 1 2 D0 H 0: 1 2 D0
H a: 1 2 D0 H a: 1 2 D0 H a: 1 2 D0
Left-tailed

Right-tailed

Two-tailed

Test Statistic

( x1 x2 ) D0

IS 310 Business Statistics

12 22

n1 n2
14

Hypothesis Tests About 1 2:

1 and 2 Known

Example: Par, Inc.

Can we conclude, using
= .01, that the mean driving
distance of Par, Inc. golf balls
is greater than the mean driving
distance of Rap, Ltd. golf balls?

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Hypothesis Tests About 1 2:

1 and 2 Known
p Value and Critical Value Approaches
1. Develop the hypotheses.H0: 1 - 2 < 0
Ha: 1 - 2 > 0

where:
1 = mean distance for the population
of Par, Inc. golf balls
2 = mean distance for the population
of Rap, Ltd. golf balls

= .01
2. Specify the level of significance.

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Hypothesis Tests About 1 2:

1 and 2 Known
p Value and Critical Value Approaches
3. Compute the value of the test statistic.
z

(x1 x2 ) D0

12 22

n1 n2
(235 218) 0
(15)2 (20)2

120
80

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17
6.49
2.62

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Hypothesis Tests About 1 2:

1 and 2 Known
p Value Approach
4. Compute the pvalue.
For z = 6.49, the p value < .0001.
5. Determine whether to reject H0.
Because pvalue < = .01, we reject H0.
At the .01 level of significance, the sample
evidence
indicates the mean driving distance of Par, Inc.
golf
balls is greater than the mean driving distance
of Rap,
Ltd. golf balls.
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18

Hypothesis Tests About 1 2:

1 and 2 Known
Critical Value Approach
4. Determine the critical value and rejection rule.
For = .01, z.01 = 2.33
Reject H0 if z > 2.33
5. Determine whether to reject H0.
Because z = 6.49 > 2.33, we reject H0.
The sample evidence indicates the mean
driving
distance of Par, Inc. golf balls is greater than the
mean
driving distance of Rap, Ltd. golf balls.

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Sample Problem
Problem # 7 (10-Page 401; 11-Page 414)
a. H
: =
H
: >
0
1
2
a
1
2
b. Point reduction in the mean duration of games during 2003 = 172 166
=6
minutes
_ _
2
2
c. Test-statistic, z = [( x - x ) 0] / [ ( / n ) + ( / n )]
1
2
1
1
2
2
=(172 166)/[ (144/60 + 144/50)]
= 6/2.3 = 2.61
Critical z at
= 1.645
Reject H
0.05
0
Statistical test supports that the mean duration of games in 2003 is less
than that in 2002.
p-value = 1 0.9955 = 0.0045

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Inferences About the Difference Between

Two Population Means: 1 and 2
Unknown

Interval Estimation of 1 2

Hypothesis Tests About 1 2

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Interval Estimation of 1 - 2:
1 and 2 Unknown
When 1 and 2 are unknown, we will:
use the sample standard deviations s1 and s2

as estimates of 1 and 2 , and

replace z/2 with t/2.

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Interval Estimation of -
1

(Unknown

and )
1
2

Interval estimate
_ _
2
2
(x - x ) t
(s /n + s /n )
1 2
/2
1
1 2
2
Degree of freedom = n + n - 2
1
2

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Difference Between Two Population

Means:
1 and 2 Unknown

Example: Specific Motors

Specific Motors of Detroit

has developed a new automobile
known as the M car. 24 M cars
and 28 J cars (from Japan) were road
tested to compare miles-per-gallon (mpg) performanc
The sample statistics are shown on the next slide.

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Difference Between Two Population

Means:
1 and 2 Unknown

Example: Specific Motors

Sample #1 Sample #2
M Cars
J Cars
24 cars
28 cars Sample Size
29.8 mpg
27.3 mpgSample Mean
2.56 mpg
1.81 mpgSample Std. Dev.

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Difference Between Two Population

Means:
1 and 2 Unknown

Example: Specific Motors

Let us develop a 90% confidence
interval estimate of the difference
between the mpg performances of
the two models of automobile.

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Point Estimate of 1 2
Point estimate of 1 2x=
1 x2
= 29.8 - 27.3
= 2.5 mpg
where:
1 = mean miles-per-gallon for the
population of M cars
2 = mean miles-per-gallon for the
population of J cars

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Interval Estimate of -
1
2

Interval estimate

2
2
(2.56) /24 + (1.81) /28)

29.8 27.3 t

0.1/2
2.5 1.676 (0.62)
2.5 1.04
1.46 and 3.54
We are 90% confident that the difference
between the average miles per gallon between
the J cars and M cars is between 1.46 and 3.54.

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Hypothesis Tests About 1 2:

1 and 2 Unknown

Hypotheses

H 0: 1 2 D0 H 0: 1 2 D0 H 0: 1 2 D0
H a: 1 2 D0 H a: 1 2 D0 H a: 1 2 D0
Left-tailed

Right-tailed

Two-tailed

Test Statistic

IS 310 Business Statistics

( x1 x2 ) D0
s12 s22

n1 n2

29

Hypothesis Tests About 1 2:

1 and 2 Unknown

Example: Specific Motors

Can we conclude, using a
.05 level of significance, that the
miles-per-gallon (mpg) performance
of M cars is greater than the miles-pergallon performance of J cars?

IS 310 Business Statistics

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Hypothesis Tests About 1 2:

1 and 2 Unknown
p Value and Critical Value Approaches

= .05
2. Specify the level of significance.
3. Compute the value of the test statistic.

( x1 x2 ) D0
s12 s22

n1 n2

IS 310 Business Statistics

(29.8 27.3) 0
(2.56) 2 (1.81) 2

24
28

4.003

31

Hypothesis Tests of -
1

: =
0
1
2

Where

:
a

>
1

average miles per gallon of M cars

1
average miles per gallon of J cars
2

At = 0.05 with 50 degree of freedom, critical t = 1.676

Since t-statistic (4.003) is larger than critical t (1.676), we

reject the null hypothesis. This means that the average
MPG of M cars is not equal to that of J cars

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End of Chapter 10
Part A

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