UNIVERSITY OF ZIMBABWE

BUSINESS STUDIES DEPARTMENT

BS106 - BUSINESS STATISTICS

2ND SEMESTER EXAMINATION – AUGUST 2010

TIME: 3 HOURS

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INSTRUCTIONS TO CANDIDATES

1) Answer question ONE (compulsory) and any other THREE questions

2) All questions carry equal marks
3) Start each question on a fresh page
4) Clearly number your answers part by part
5) Indicate the attempted questions on the space provided, NOT in the examiner’s column.

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QUESTION ONE (COMPULSORY) 25 marks

1a) Define and give business related examples for each of the following data types:

(i) Primary data

(ii) Secondary data
(iii) Ordinal data
(iv) Interval data
(v) Ratio data (10 marks)

1b) Entry at the University of Zimbabwe for any undergraduate degree programme is believed to
be quite stiff with some potential students postulating that on average you have to score not less
than 10 points in order to be admitted. A random sample of 40 current 2010 part one students
was taken and their entry points were as given in the table below.

Range of points 0 to <5 5 to <10 10 to <15 15 to <20

Number of students 3 7 25 5
Test how accurate this postulation is at 7.5% level of significance. (10 marks)

1c) Tashinga Company manufactures electric motors at Murambinda Growth point. The
average shaft for 1-horse power motor is 3 centimetres in diameter with a standard deviation of
0.1 centimetres. Shaft diameter is normally distributed. The motor will be classified as defective
if the shaft diameter does not fall in the interval of 2.8 centimetres to 3.1 centimetres. What
percentage of defectives shafts should be expected from this production line? (5 marks)
QUESTION TWO (OPTIONAL) 25 marks

2a) Differentiate between stratified and cluster random sampling and give examples where each
can be applied. (5 marks)

2b) Tinotenda Company is to test the popularity of two products in the same market before it
can massively produce them. For product A, 52 of the 170 people randomly chosen and
interviewed indicated that they would buy it if offered on the market. For product B, 35 indicated
preference for it out 150 who were randomly chosen. Would the two products be equally popular
in this market? Test at the 10 % level of significance. (10 marks)

2c) Below are the expected cash flows from two investment options (in thousand dollars). Using
appropriate summary measures, which of the two investment options is better and why? (5
marks)

Option A 69.50 32.90 56.55 29.19 35.00

Option B 30.80 37.60 26.60 29.20 55.80

2d) Determine the missing values for the following probabilities involving the standard normal
distribution.

(i) Pr{? ≤ Z ≤ ?} = 0.1027 (2 marks)

(ii) Pr{ Z ≥ ? } = 0.0985 (2 marks)
(iii) Pr{? ≤ Z } = 0.6331 (1 mark)

QUESTION THREE (OPTIONAL) 25 marks

3a) Explain the principles of inclusion and exclusion as they relate to transforming raw figures
into a grouped frequency distribution. (5 marks)

3b) Two machines are used for filling plastic containers with a net volume of 16 litres. The
filling process can be assumed to be normal with equal standard deviations. The quality control
department suspects that both machines fill to the same net volume, whether or not this volume
is 16 litres. The results in the table below were obtained from random samples of measurements
from the two machines.

Statistic Machine One Machine two

Sample mean 16.15 16.05
Standard deviation 0.0303 0.0295
Sample size 10 9

(i) Find a 95% confidence interval of the difference in the mean filling volumes. Interpret
your limits (5marks)
(ii) At 1% level of significance, is there any statistically significant difference in the mean
fillings volumes between the two machines? (10 marks)

3c) The experience of a sales person who sells his products through the telephone is that 10% of
his calls lead to a sale and that the telephone calls are independent of each other. Calculate the
probability that he:

(i) makes exactly 3 sales in 12 calls (2 marks)

(ii) makes fewer than 3 sales in 15 calls (3 marks)

QUESTION FOUR (OPTIONAL) 25 marks

4a) Differentiate between mutually exclusive events and independent events in probability. Give
business related examples of each of these events. (5 marks)

4b) A well-known bank credit card firm wishes to estimate the proportion of credit card holders
who carry a non-zero balance at the end of the month and incur an interest charge. Assume that
the desired margin of error is 0.03 at 98% confidence level. How large a sample should be
selected if it is anticipated that roughly 70% of the firm’s credit holders carry a non-zero balance
at the end of the month? (5 marks)

4c) The following are earnings (in hundreds) of a random sample of employees of a certain company.

350; 370; 460; 510; 610; 720; 290; 330; 520; 730; 650; 580;

470; 250; 510; 290; 390; 300; 280; 310; 420; 620; 430; 530

Present the above earnings using an appropriate graph. (5 marks)

4d) Using an appropriate graphical display, estimate the median value of the distribution
given below. (Hint: find the missing frequencies first) (5 marks)

Range 0 to < 5 5 to < 10 10 to < 15 15 to < 20 20 to < 25

< cum f(i) 10 24 30

4e) A textile producer has established that a spinning machine stops randomly due to thread
breakages at an average rate of 5 stoppages per hour. Find the probability that:

(i) in any given hour, three stoppages will occur in this spinning machine (2 marks)
ii) in any given 30 minutes, at least two stoppages will occur in
this spinning machine
(3 marks)

QUESTION FIVE (OPTIONAL) 25 marks

5a) In Statistics, data can be summarized through summary measures or through graphical
displays. In your view, which of the two approaches is better and why? (5 marks)

5b) A Harare night club obtains data on the age and marital status of a random sample of its
patrons. Out a total of those who were under the age of 30 years, 77 of them were single and 14
were married. For those who were 30 years and above, 28 were single and 21 were married.
What is the probability that a patron selected at random:

(i) is married on condition that he or she is under 30 years? (3 marks)

(ii) is either single or 30 years and above? (2 marks)

5c) Construct the confidence intervals for the following two different data sets using the
given confidence levels. Which is more precise? Support your answer. (5 marks)

Data set Sample size Sample mean Sample Standard Deviation Confidence Level
A 100 35.8 20 95%

Data set Sample size Sample mean Sample Standard Deviation Confidence Level
B 25 165.45 38.6 90%

5c) One of the questions asked by a reputable research company was: “In the last 12 months,
when travelling for business, what type of airline ticket did you purchase most often?” The
data obtained are shown in the following contingency table. At 5% level of significance, test for
independence between the type of ticket and type of flight. (10 marks)

Type of ticket Type of Flight Total

Domestic Flight International Flight
First class 29 22 ?
Business class 95 121 ?
Economy class 518 135 ?
Total ? ? ?

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END OF EXAMINATION GOOD LUCK

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