Questions of Business Statistics

August 11, 2021

1 Descriptive Statistics
1. From the following information on the number of defective components in 1000
boxes;
Number of defective components 0 1 2 3 4 5 6
Number of boxes 25 306 402 200 51 10 6
Calculate the arithmetic mean of defective components for the whole of the pro-
duction line.

2. A company is planning to improve plant safety. For this, accident data for the last
50 weeks was compiled. These data are grouped into the frequency distribution
as shown below.
Number of accidents 04 59 1014 1519 2024
Number of weeks 5 22 13 8 2
Calculate the A.M. of the number of accidents per week.

3. There are two units of an automobile company in two different cities employing
760 and 800 persons, respectively. The arithmetic means of monthly salaries
paid to persons in these two units are Rs. 18,750 and Rs. 16,950 respectively.
Find the combined arithmetic mean of salaries of the employees in both the units.

4. The 838 mutual funds that are part of the Using Statistics scenario are classified
according to the category (small cap, mid cap, and large cap), the type (growth
or value), and the risk level of the mutual funds (low, average, and high).
Fund Category Objective Risk Three-year Return
Baron Growth Small Cap Growth Low 20.8
Columbia Acorn Z Small Cap Growth Low 26.0
FBR Small Cap Small Cap Growth Low 24.9
Perritt Micro Cap Opportunities Small Cap Growth Low 29.9
Schroder Capital US Opportunities Inv Small Cap Growth Low 22.3
Value Line Emerging Opportunities Small Cap Growth Low 19.0
Wells Fargo Advtg Small Cap Opp Adm Small Cap Growth Low 22.4

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 (a) Compute the mean three-year annualized return for the small-cap growth
funds with low risk.

(b) Compute the median three-year annualized return for the small-cap growth
funds with low risk.

(c) Compute the first quartile (Q1 ) and third quartile (Q3 ) three-year annual-
ized return for the small-cap growth funds with low risk.

(d) Compute the range of the three-year annualized returns for the small-cap
growth funds with low risk.

(e) Compute the interquartile range of the three-year annualized returns for the
small-cap growth fundswith low risk.

(f) Compute the variance and standard deviation of the three-year annualized
returns for the small-cap growth funds with low risk.

(g) Compute the Z scores of the three-year annualized returns for the small-cap
growth funds with low risk

(h) Construct the box-and-whisker plot of the three-year annualized returns for
low-risk, average risk, and high-risk mutual funds.
5. A population of 12-ounce cans of cola is known to have a mean fill-weight of
12.06 ounces and a standard deviation of 0.02.

(a) The population is known to be bell shaped. Describe the distribution of fill-
weights. Is it very likely that a can will contain less than 12 ounces of cola?

(b) The shape of the population is unknown, and we cannot assume that it is
bell shaped. Describe the distribution of fill weights. Is it very likely that a
can will contain less than 12 ounces of cola?

2 Probability
1. In the Using Statistics follow-up survey, additional questions were asked of the
300 households that actually purchased big-screen televisions. Following table
indicates the consumers responses to whether the television purchased was a

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 plasma screen and whether they also purchased a DVR in the past 12 months.
PURCHASED PLASMA SCREEN Purchased DVR
Yes No Total
Plasma screen 38 42 80
Not plasma screen 70 150 220
Total 108 192 300

(a) Find the probability that if a household that purchased a big-screen televi-
sion is randomly selected, the television purchased is a plasma screen.

(b) the purchases are cross-classified as plasma screen or not plasma screen
and whether or not the household purchased a DVR. Find the probability
that a randomly selected household that purchased a big-screen television
also purchased a plasmascreen television and a DVR.

(c) the purchases were cross-classified as a plasma screen or not a plasma

screen and whether or not the household purchased a DVR. Find the prob-
ability that among households that purchased a big-screen television, they
purchased a plasma-screen television or a DVR.

(d) Table is contingency table for whether the household purchased a plasma-
screen television and whether the household purchased a DVR. Of the
households that purchased plasma-screen televisions, what is the proba-
bility that they also purchased DVRs?

(e) Use the decision tree to find the probability that a household purchased a
DVR, given that the household purchased a plasma-screen television.

2. A standard six-sided die has six faces. Each face of the die contains either one,
two, three, four, five, or six dots. If you roll a die, what is the probability that
you will get a face with five dots?
3. In the follow-up survey of the 300 households that actually purchased big-screen
televisions, the households were asked if they were satisfied with their purchases.
Table 4.3 cross-classifies the responses to the satisfaction question with the re-
sponses to whether the television was a plasma-screen television.
Type of television Satisfied with purchase
Yes No Total
Plasma screen 64 16 80
Not plasma screen 176 44 220
Total 240 60 300
(a) Determine whether being satisfied with the purchase and type of television
purchased are statistically independent.

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 (b) Consider the 80 households that purchased plasma-screen televisions. In
above table 64 households are satisfied with their purchase and 16 house-
holds are dissatisfied. Suppose two households are randomly selected from
the 80 customers. Find the probability that both households are satisfied
with their purchase.

4. The probability that a person has a certain disease is 0.03. Medical diagnostic
tests are available to determine whether the person actually has the disease. If the
disease is actually present, the probability that the medical diagnostic test will
give a positive result (indicating that the disease is present) is 0.90. If the disease
is not actually present, the probability of a positive test result (indicating that the
disease is present) is 0.02. Suppose that the medical diagnostic test has given a
positive result (indicating that the disease is present). What is the probability that
the disease is actually present? What is the probability of a positive test result?

3 Probability Distribution
1. Suppose X is the number of siblings of an Institute students. The support of X
is, of course, 0, 1, 2, 3. Find f (x) = P (X = x), the probability mass function
of X, for all x in the support, where f (x) = 4x.
2. Let f (x) = bx3 for 1, 2, 3. Determine the constant b so that the function f (x)
satisfies the conditions of being a probability mass function, and also find E(X)
and V ar(X).

3. Let X be a continuous random variablewith PDF fX (x)= 5x3 for 0 < x < 1
2 1
and fX (x) = 0, for otherwise. Find P X ≤ |X > .
3 3
 
2 2 6
4. Let X be a continuous random variable with PDF fX (x) = 2x 5x + for
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0 < x < 1 and fX (x) = 0, for otherwise. Find expected value and variance.

5. The data is given as below for Home Mortgages

Home Mortgages approved per week 0 1 2 3 4 5 6
Probability 0.10 0.10 0.20 0.30 0.15 0.10 0.05
(a) Find the expected value.

(b) Find the variance.

(c) Find the standard deviation.

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 6. If the likelihood of a tagged order form is 0.1, what is the probability that there
are three tagged order forms in the sample of four?

7. If the likelihood of a tagged order form is 0.1, what is the probability that there
are three or more (that is, at least three) tagged order forms in the sample of four?

8. If the likelihood of a tagged order form is 0.1, what is the probability that there
are less than three tagged order forms in the sample of four?

9. Accuracy in taking orders at a drive-through window is an important feature for

fast-food chains. Each month QSR Magazine, publishes the results of its sur-
veys. Accuracy is measured as the percentage of orders consisting of a main
item, side item, and drink (but omitting one standard item, such as a pickle) that
are filled correctly. In a recent month, suppose that the percentage of correct
orders of this type filled at Burger King was approximately 88%. If a sample of
three orders is taken, what are the mean and standard deviation of the binomial
distribution for the number of orders filled accurately? Suppose that you and two
friends go to the drive-through window at Burger King, and each of you places
an order of the type just mentioned. What are the probabilities that all three, that
none of the three, and that at least two of the three orders will be filled accurately?

10. The number of work-related injuries per month in your manufacturing plant is
known to follow a Poisson distribution with a mean of 2.5 work-related injuries
a month. What is the probability that in a given month no work-related injuries
occur? That at least one work-related injury occurs?