Case Studies/Problems in Statistics By Prof Girish Phatak

Q.1 The following data are scores on a management examination taken by a group of
22 people.
88, 56, 64, 45, 52, 76, 54, 79, 38, 98, 69, 77, 71, 45, 60, 78, 90, 81, 87, 44, 80, 41
Find the mean, mode, median, and the 20 th, 30 th, 60 th and 90 th percentiles for
these data.

Q.2 The daily price of Brent crude oil in dollars per barrel in summer 1997 was as
follows: 17.5, 17.6, 18.3, 17.9, 17.4, 16.9, 17.1, 17.1, 18.0, 17.2, 18.3, 17.8, 17.1,
18.3, 17.5, 17.4
Find the mean, variance and standard deviation.

Q.3 A device has three components and works as long as at least one of the
components is functional. The reliabilities of the components are 0.96, 0.91 and
0.8. What is the probability that the device will work when needed ?

Q.4 Two stocks A and B are known to be related in that both are in the same industry.
The probability that stock A will go up in price tomorrow is 0.2, and the
probability that both stocks A and B will go up tomorrow is 0.12. Suppose that
tomorrow you find that stock A did go up in price. What is the probability that
Stock B went up as well?

Q.5 According to an article in USA Today, 90% of Americans will suffer from high
blood pressure as they age. Out of 20 randomly chosen people what is the
probability that at most three will suffer from high blood pressure?

Q.6 A mainframe computer in a university crashes on the average 0.71 times in a

semester. What is the probability that it will crash at least two times in a given
semester? What is the probability that it will not crash at all in a given semester ?
The MIS administrator wants to increase the probability of no crash at all in a
semester to at least 90%. What is the largest mean that will achieve this goal?

Q.7 A shipment of pins contains 25 good ones and 2 defective ones. At the receiving
department an inspector picks three pins at random and tests them. If any
defective pin is found among the three that are tested, the shipment would be
rejected. What is the probability that the shipment would be accepted ? To
increase the probability of acceptance to atleast 90%, it is decided to do one of the
following:
1. Add some good pins to the shipment
2. Remove some defective pins in the shipment
For each of the two options, find out exactly how many pins should be added or
removed.
Q.8 A graduating student keeps applying for jobs until she has three offers. The
probability of getting an offer at any trial is 0.48. What is the expected number of
applications ? What is the variance? If she has enough time to complete only six
applications, how confident she be of getting three offers within the available
time? If she wants to be atleast 95% confident of getting three offers, how many
applications should she prepare? Suppose she has time for at most six applications
for what minimum value of p can she still have 95% confidence of getting three
offers within the available time?

Q.9 A graduating student keeps applying for jobs until she gets an offer. The
probability of getting an offer at any trial is 0.35. What is the expected number of
applications ? What is the variance? If she has enough time to complete at most
four applications, how confident she be of getting an offer within the available
time? If she wants to be atleast 95% confident of getting an offer, how many
applications should she prepare? Suppose she has time for at most four
applications for what minimum value of p can she still have 95% confidence of
getting an offer within the available time?

Q.10 Suppose the amount of time it takes to assemble a plastic module ranges from 27
to 39 seconds and that assembly times are uniformly distributed. Describe the
distribution. What is the probability that a given assembly will take between 30
and 35 seconds? Fewer than 30 seconds?

Q.11 According to the National Association of Insurance Commissioners, the average

annual cost for automobile insurance in the USA is $691. Suppose automobile
insurance costs are uniformly distributed in the USA with a range from $200 to
$1182. What is the standard deviation of this uniform distribution? What is the
height of the distribution? What is the probability that a person’s annual cost for
automobile insurance in the USA is between $410 and $825?

Q.12 Light bulbs manufactured by a particular company have an exponentially

distributed life with mean 100 hours. What is the probability that the lightbulb I
am now putting in will last at least 65 hours? What is the standard deviation of the
lifetime of a lightbulb?

Q.13 The demand for unleaded gasoline at a service station is normally distributed with
mean 27,009 gallons per day and standard deviation 4,530. Find two values that
will give a symmetric 0.95 probability interval for the amount of unleaded
gasoline demanded daily.

Q.14 The Toyota Pirus uses both gasoline and electric power. Toyota claims its mileage
per gallon is 52. A random sample of 40 cars is taken and each sampled car is
tested for its fuel efficiency. Assuming that 52 miles per gallon is the population
mean and 2.4 miles per gallon is the population standard deviation, calculate the
probability that the sample mean will be between 52 and 53.
Q.15 Shimano mountain bikes are displayed in chic clothing boutiques in Milan, Italy
and the average price for the bike in the city is $700. Suppose that the standard
deviation of bike prices is $100. If a random sample of 60 boutiques is selected,
what is the probability that the average price for a Shimano mountain bike in this
sample will be between $680 and $720?

Q.16 A telephone company wants to estimate the average length of long distance calls
during weekends. A random sample of 50 calls gives a sample mean 14.5 minutes
and sample standard deviation 5.6 minutes. Give a 95% confidence interval and a
90% confidence interval for the average length of a long distance phone call
during weekends.

Q.17 Sony’s new optical disk system prototype tested and claimed to be able to record
an average of 1.2 hours of high definition TV. Assume n=10 trials and s=0.2 hour.
Give a 90% confidence interval

Q.18 A transportation company wants to estimate the average length of time goods are
in transit across the country. A random sample of 20 shipments gives sample
mean 2.6 days and sample standard deviation 0.4 day. Give a 99% confidence
interval for the average transit time.

Q.19 An accountant wants to estimate the average amount of an account of a service

company. A random sample of 46 accounts yields a sample mean $16.50 and
sample standard deviation $2.20. Give a 95% confidence interval for the average
amount of an account.

Q.20 The engine of the Volvo model S70-T5, is stated to provide 246 horsepower. To
test this claim, believing it is too high, a competitor runs the engine n=60 times
randomly chosen, and gets a sample mean of 239 horse power and standard
deviation of 20 horse power. Conduct the test, using α=0.01

Q.21 An investment services company claims that the average annual return on stocks
within a certain industry is 11.5%. An investor wants to test whether this claim is
true and collects a random sample of 50 stocks in the industry of interest. He finds
that the sample average annual return is 10.8%. and that the sample standard
deviation is 3.4%. Does the investor have enough evidence to reject the
investment company’s claim? (Use α = 0.05 )

Q.22 The average number of weeks that banner ads run at a web site is estimated to be
5.5. You want to check accuracy of this estimate. A sample of 50 ads reveals a
sample average of 5.1 weeks with a sample standard deviation of 2.3 weeks. State
the null and alternate hypotheses and carry out the test at the 0.05 level of
significance.
Q.23 Certain eggs are stated to have reduced cholesterol content, with an average of
only 2.5% cholesterol. A concerned health group wants to test whether the claim
is true. The group believes that more cholesterol may be found, on the average in
the eggs. A random sample of 100 eggs reveals a sample average content of 5.2%
cholesterol, a sample standard deviation of 2.8%. Does the health group have
cause for action ? Use alpha= 0.05

Q.24 A new kind of alkaline battery is believed to last on an average of 25 hours of

continuous use. Assume that the population standard deviation is 2 hours. If a
random sample of 100 batteries is selected and tested, what is the probability that
the average battery in the sample will last less than 24 hours of continuous use?

Q.25 A quality control engineer knows that 10% of the microprocessor chips produced
by a machine are defective. Out of a large shipment, five chips are chosen at
random. What is the probability that none of them is defective? What is the
probability that at least one is defective? Explain

Q.26 The following data are independent random samples of sales of the FIAT Palio
model made in joint venture of FIAT Motors and GM Motors. The data represent
sales at dealership before and after the announcement of the Palio model will no
longer be made in FIAT Motors. Sales numbers are monthly.
Before : 329, 234, 423, 328, 400, 399, 326, 452, 541, 680, 456, 220

After : 212, 630, 276, 112, 872, 788, 345, 544, 110, 129, 776, 240

Conduct hypothesis testing for equality of sales. Use level of significance 0.01

Q.27 Two 12 meter boats, the K boat and the L boat, are tested as possible contenders
in the America’s Cup races. The following data represent the time, in minutes to
complete a particular track in independent random trials of the two boats:

K boat: 12.0, 13.1, 11.8, 12.6, 14.0, 11.8, 12.7, 13.5, 12.4, 12.2, 11.6, 12.9

L boat: 11.8, 12.1, 12.0, 11.6, 11.8, 12.0, 11.9, 12.6, 11.4, 12.0, 12.2, 11.7

Test the null hypothesis that the two boats perform equally well. Is one boat
faster, on average, than the other? Assume equal population variances. Take α =
0.05

Q.28 The senior vice president for marketing at Westin Hotels believes that the
company’s recent advertising of the Westin Plaza in New York has increased the
average occupancy rate at the hotel by at least 5%. To test the hypothesis, a
random sample of daily occupancy rates ( in percentages ) before the advertising
is collected. A similar random sample of daily occupancy rates is collected after
the advertising took place. The data are as follows.
 Before Advertising ( % ) After Advertising ( % )

86, 92, 83, 88, 79, 81, 90, 88, 94, 97, 99, 89, 93, 92,
76, 80, 91, 85, 89, 77, 91, 83 98, 89, 90, 97, 91, 87, 80, 88, 96

Assume normally distributed populations, of occupancy rates with equal

population variances. Test the vice president’s hypothesis. Take α = 0.05.

Q.29 In the theory of Finance, a market for any asset or commodity is said to be
efficient if items of identical quality and other attributes are sold at the same
price. A Geneva based oil industry analyst wants to test the hypothesis that the
spot market for crude oil is efficient. The analyst chooses the Rotterdam oil
market, and he selects Arabian Light as the type of oil to be studied. A random
sample of eight observations from each of four sources of the spot price of a
barrel of oil during February is collected. Data in U.S. Dollars per barrel are as
follows :

U.K. Mexico UAE Oman

17.80 18.01 18.10 18.05
18.00 17.75 17.92 18.01
17.98 18.00 18.01 17.94
18.20 17.77 17.88 18.23
18.00 18.01 18.30 18.20
17.99 18.01 18.22 18.00
18.10 18.12 18.56 17.84
17.90 18.20 18.10 18.11

Construct an ANOVA table. Based on these data, what should the analyst
conclude about whether the market for crude oil is efficient ? i.e. Is there any
evidence of differences in the average price per barrel of oil from the four
sources? Take α = 0.01

Q.30 Research has shown that in the fast paced world of electronics, the key factor that
separates the winners from losers is actually how slow a firm is in making
decisions. The most successful firms take longer to arrive at strategic decisions on
product development, adopting new technologies, or developing new products.
The following values are the number of months to arrive at a decision for firms
ranked high, medium, and low in terms of performance:
High Medium Low
3.5 3 1
4.8 5.5 2.5
3.0 6 2
6.5 4 1.5
7.5 4 1.5
8 4.5 6
2 6 3.8
6 2 4.5
5.5 9 0.5
6.5 4.5 2
7 5 3.5
9 2.5 1
5 7 2
10
6
Do an ANOVA. Can you say there is a difference in the length of time it takes to
make a decision? Use α=0.05

Q.31 The company conducted tread wear tests on the tire to determine whether there is
a significant difference in tread wear if the average speed with which automobile
driven varies. Company uses 5 suppliers to provide tires. Analyze randomized
block design at alpha=0.01.

Supplier Slow speed Medium speed High speed

1 3.7 4.5 3.1
2 3.4 3.9 2.8
3 3.5 4.1 3.0
4 3.2 3.5 2.6
5 3.9 4.8 3.4

Q.32 A shoe retailer conducted a study to determine whether there is a difference in the
number of pairs of shoes sold per day by stores according to the number of
competitors within a 1-mile radius and the location of the store. The company
researches selected three types of stores for consideration of study: stand-alone
suburban stores, mall stores, and downtown stores. These stores vary in the
number of competing stores within a 1-mile radius, which have been reduced to
four categories: 0 competitors, 1 competitor, 2 competitor, and 3 or more
competitors. Suppose the following data represent the number of pairs of shoes
sold per day for each of these types of stores with the given numbers of
competitors. Use alpha=0.05 and a two-way ANOVA to analyze the data
No of No of No of No of
competitors competitors competitors competitors
0 1 2 3 or more
Stand-Alone 41 38 59 47
30 31 48 40
45 39 51 39
Store Location Mall 25 29 44 43
31 35 48 42
22 30 50 53
Downtown 18 22 29 24
29 17 28 27
33 25 26 32
 Q.33 The following are the annual profits in thousands of rupees of a certain
business.
Year: 1991, 1992, 1993, 1994, 1995, 1996, 1997

Profit in
thousands
of rupees: 60, 72, 71, 65, 80, 85, 95
Use the simple linear regression to fit a straight line to the above data. Also make an
estimate of the profits in 1998. Also calculate the coefficient of correlation and
coefficient of determination. Also conduct F Test and t Test at Alpha=0.01

Q.34 Fit a straight line trend using the method of Linear regression for the sales in
thousand rupees as given below.
Year Sales in Thousands of Rupees
1998 204
1999 230
2000 192
2001 250
2002 274
2003 290
2004 315

Determine the forecast for year 2005 and year 2006. Also determine coefficient of
correlation and coefficient of determination. Also conduct F Test and t Test at
Alpha=0.01

Q.35 The demand for colour TV sets has been rising rapidly, The following data
indicates past sales for last nine years. Fit a quadratic curve to the data and
forecast the demand during year 2005 and year 2006

Demand for
Colour TV
Year Sets
1996 2500
1997 3500
1998 5000
1999 6500
2000 8500
2001 11500
2002 15000
2003 20500
2004 28500

Also determine coefficient of correlation and coefficient of determination. And

comment on the result. Also conduct F Test and t Test at Alpha=0.05
 Q.36 The following data are indexed prices of gold and copper over a 10 year period.
Assume that the indexed values constitute a random sample from the population
of possible values. Compute Pearson product moment correlation coefficient. Test
for the existence of a linear correlation between the indexed prices of the two
metals at alpha=0.05.

Gold 76 62 70 59 52 53 53 56 57 56
Copper 80 68 73 63 65 68 65 63 65 66

Q.37 Sujata, owner of a business unit is concerned about the sales behaviour of her
product. She realizes that there are many factors that might help explain sales but
believes that advertising and prices are major determinants. She has collected the
following data.

Sales ( Units Sold ) No. of Advertisements Price in Rs.

33 3 125
61 6 115
70 10 140
82 13 130
17 9 145
24 6 140

Calculate the regression equation to predict the sales from advertising and price.
Id no. of advertisements is 7 and price is Rs. 132, what sales would you predict.
Also compute adjusted R2. Also conduct F Test and t Test at Alpha=0.05

Q.38 ABC Company manufactures a solvent which is packed in one kg cans. It utilizes
automatic filling equipment and desires to maintain the nominal one kg filling
with in ±10 gms. It takes a sample of five cans. The following table shows the
individual measurements of filling of the last five samples. set up a control chare
and establish whether the process is under control:

Sample no.
1 2 3 4 5
1. 1001 1002 1000 998 999
2. 999 998 1001 998 999
3. 995 1002 1003 1001 1002
4. 1000 1001 999 998 1002
5. 994 996 996 1001 999

The values of constants A2, D3 and D4 for the sample size of five are 0.577, zero
and 2.115 respectively.
Q.39 In a certain bottling industry, the quality control inspector recorded the weight of
each of the five bottles selected at random during each hour of four hours in the
morning.

Time Weights (ounces)

8-00 am 41 43 42 41 43
9-00 am 39 40 40 39 42
10-00 am 41 44 43 46 41
11-00 am 38 39 40 39 39

Plot Mean and range charts and find which of the given observation are out of
control. Given that A2= .577, D3= 0, D4= 2.114

Q.40 Six consecutive lots received from a vendor were inspected by sampling process
by the inward inspection of the buyer. The sample size was varied as per
variations in the lot size.
The number of defectives of each sample were recorded as under :

Sample No. : 1 2 3 4 5 6
Lot size : 2850 1860 480 970 4385 2568
Sample size : 125 125 50 80 200 125
No. of defectives : 1 3 - 2 4 1

Construct a suitable control chart and comment on the results.

Q.41 10 samples, each of size 50 of a pipe were inspected in pressure testing. The
results of the inspection are given below :

Sample No. : 1 2 3 4 5 6 7 8 9 10
No. of defectives : 2 3 2 0 2 3 2 1 2 3
Draw a np-chart and state your conclusion

Q.42 Ten woolen carpets were studied critically for total number of defects in their
texture. The details of the number of defects in each carpet are given below :

Carpet No. : 1 2 3 4 5 6 7 8 9 10

No. of defects: 2 4 3 5 1 3 2 3 4 3

All ten carpets however, were regarded as “acceptable” by the quality control
department of the company. Construct a control chart for number of defects and
comment on the Results.
Q.43 The following table describes the recent purchases of US stocks by individual or
institution as well as domestic or foreign. Is there evidence of a dependence of
institutional buying on whether the buyer is foreign or domestic? Use alpha=0.05
Domestic Foreign
Individual 25 32
Institution 30 13

Q.44 An article in the wall street journal reports a comparison between gold jewelry and
platinum jewelry by well known designers versus simply made. The following
table represents the results of random samples of sales of gold and platinum
jewelry by well known designers versus not made by designers. Test the null
hypothesis that the public’s preference for the gold and platinum jewelry is the
same or not the jewelry is designed by well known designers. Use alpha=0.05

Gold Jewelry Platinum Jewelry

Well-known designer 76 108
Not by Designer 54 19

Q.45 A company is considering five possible names for its new product. Before
choosing a name, the firm decides to test whether all five names are equally
appealing. A random sample of 100 people is chosen, and each person is asked to
state her or his choice of the best name among the five possibilities. The numbers
of people who choose each one of the names are as follows

Product A B C D E
Name
Number of 4 12 34 40 10
Choices

Conduct the Chi square test. Use alpha= 0.05

Q.46 The following data are a random sample of consumers’ income and expenditure
on certain luxury items. Compute Spearman rank correlation coefficient and test
for the existence of population correlation.

Income($1000s/year) 48 39 65 80 73 60 52 120 100 60 53

LuxuryItem 10 50 120 225 90 60 55 340 170 25 80
spending( $ / month)