END TERM EXAM - BUSINESS STATISTICS

MBA (2023-2025) – TERM I (Sec D, E & F)

XIM, XIM UNIVERSITY

• Total marks: 40 marks. Duration: 2 hours 30 minutes.

• Answer all the questions. Answer the questions in a separate word document.
• Write your ROLL NUMBER and PAGE NUMBER in every page of the answer
document. Use header/footer function of word document.
• For all the questions, substantiate and detail your answer with appropriate statistical
analysis. Mere excel output will not be awarded any marks.
• Formulate the hypothesis wherever required and state the test statistics, distribution
assumed and corresponding critical value/p-vlaue.
• Copy - paste the necessary tables/figures from Excel sheet to the word document for
analysis.
• Question 2, 6, 8 & 9 are accompanied with dataset for analysis.
o Data for Question 2, 6, 8 & 9 will generate random numbers for each of you. The
formula is included in the excel sheet attached. Drag and drop the formula across
cells to generate values and answer the question based on these values.
o This function will generate a new value each time the worksheet is calculated.
Any changes in the other cell will change the values of columns in which a
random number has been generated. So copy the column that contains
RANDBETWEEN(), then use Paste Special > Values and paste it in separate
column/worksheet for further analysis.
• Naming Convention: ROLLNUMBER_ANSWER (all caps) Eg: UM20762_ANSWER
• Although the excel sheet will not be evaluated, the excel sheet with your calculations
should be submitted along with the word file.
o Naming Convention: ROLLNUMBER_ANALYSIS (all caps)
• Eg: UM20762_ANALYSIS
• Ensure to zip the files.
o Naming Convention: ROLLNUMBER (all caps) Eg: UM20762

Zip file containing the evaluation sheets should be uploaded in the following link:

https://forms.gle/B3beAtdB2ePAfh2x7
1. You are considering the risk-return profile of two-mutual funds for investment. The relatively
risky fund promises an expected return of 8% with a standard deviation of 14%. The relatively
less risky fund promises an expected return and standard deviation of 4% and 5%,
respectively. Assume that the returns are approximately normally distributed (Substantiate
your answers with appropriate statistical reasoning).
a. Which mutual fund will you pick if your objective is to minimise the probability of
earning a negative return? (1.5 marks)
b. Which mutual fund will you pick if your objective is to maximise the probability of
earning a return above 8%? (1.5 marks)

2. Valero Energy, a major player in the petroleum industry, operates 7000 gas filling outlets
across the US. The company is interested in analysing its pricing strategy concerning premium
gasoline compared to its competitors. Valero believes that their premium gasoline prices are
higher than the national average ($2.28/gallon) due to their superior additives. How would you
go ahead to determine if Valero’s average is higher than the national average? Assume sample
size of your choice. (Data sheet: Question 2) (4 marks)

3. Suppose you were told that the 90% confidence interval for the mean μ based on some known
σ is (329.87, 356.46). You, however, want a 95% confidence interval. Determine the 95%
confidence interval. What is the margin of error for a 99% confidence interval? (1+1= 2 marks)

4. Suppose that in country S, 40% of the people support party A, 30% of the people support
party B, 20% support party C, and 10% support party D. Let Q be a certain policy. We’re given
that 50% of the supporters of party A are in favor of Q, 40% of the supporters of party B are in
favor of Q, 30% of the supporters of party C are in favor of Q, and 100% of the supporters of
party D are in favor of Q. (2 marks)

a. If we draw a citizen from this imaginary country at random, what is the probability
that the citizen supports Q?

b. Suppose that our friend Robbie is a citizen of the imaginary country S. We know he
doesn’t support policy Q because his Facebook status is “I really dislike Q :(”. Which
party is he likely to support? Explain using appropriate probability comparison.

5. On Monday mornings, the First National Bank has only one teller window open for deposits
and withdrawals. Experience has shown that the average number of arriving customers in a
four-minute interval on Monday mornings is 2.8, and each teller can serve more than that
number efficiently. These random arrivals at this bank on Monday mornings are Poisson
distributed. (1 x 7 =7 marks)

a. What is the probability that on a Monday morning exactly six customers will arrive in
a four-minute interval?
b. What is the probability that no one will arrive at the bank to make a deposit or
withdrawal during a four-minute interval?
c. Suppose the teller can serve no more than four customers in any four-minute interval at
this window on a Monday morning. What is the probability that, during any given four-
minute interval, the teller will be unable to meet the demand?
d. What is the probability that the teller will be able to meet the demand?
e. When demand cannot be met during any given interval, a second window is opened.
What percentage of the time will a second window have to be opened?
f. What is the probability that exactly three people will arrive at the bank during a two-
minute period on Monday mornings to make a deposit or a withdrawal?
g. What is the probability that five or more customers will arrive during an eight-minute
period?

6. The manufacturer of an MP3 player, keen on maximizing sales, embarked on a strategic

pricing experiment. To investigate the impact of pricing on sales, the owner implemented a
multifaceted approach. 20 outlets were selected randomly to sell the MP3 player at a reduced
price, incorporating various discounts and promotional strategies. Simultaneously, at another
17 randomly selected outlets, the MP3 player was sold at the regular price, emphasizing the
product's premium features and customer service support. The data collected at the outlets
reveal the number of units sold at both the regular and reduced prices. Can the manufacturer
confidently assert that the carefully designed price reduction strategy has significantly
amplified the sales of the MP3 player? (Data sheet: Question 6)

For the above problem, the null and alternate hypothesis can be formulated in 2 different ways.
Show the two sets of hypotheses and validate BOTH clearly stating the test-statistics, critical
value/ p-value in arriving at conclusion. Compare and contrast the results (2+1+2=5marks)

7. A bank wishing to increase its customer base advertises that it has the fastest service and that
virtually all of its customers are served in less than 10 minutes. A management scientist has
studied the service times and concluded that service times are exponentially distributed with a
mean of 5 minutes. What does the bank mean when it claims “virtually all” its customers are
served in less than 10 minutes. (2 marks)

8. The results of a one-way ANOVA are reported data sheet Question 8. Use the .05
significance level. Answer the following questions. (1x5=5 marks)

a. How many treatments are in the study?

b. Formulate the appropriate null and alternate hypotheses (Do not use any verbal
descriptions)

c. What is the total sample size?

d. What is the p-value?

e. What is your decision regarding the null hypothesis?

9. Sharma & Co., a specialized marketing agency based in Mumbai, specializes in crafting and
delivering customized marketing campaigns to clients across various industries. A substantial
portion of the agency's revenue comes from delivering these tailored marketing campaigns to
clients' target audiences. To maximize return on investment and provide competitive pricing,
Karthik Sharma, the agency's owner, faces the challenge of accurately estimating the cost of
delivering marketing campaigns in the Indian market. Karthik Sharma initiated a study based
on a random sample of recent campaign deliveries to identify the key factors influencing
campaign delivery costs (Data sheet Question 9):

Campaign Preparation Time: This factor represents the hours between finalizing a campaign
plan and readiness for execution.

Delivery Time: It's the actual set-up time in hours from readiness for execution to actual
airtime.

Given these details, answer the following questions:

Mr. Sharma is seeking a reliable method to estimate the delivery cost for a marketing campaign
based on the factors listed above. Help him out. (4 marks)

Option I: If your data shows any pattern in the residuals,

a) Analyse the reason(s) for the deviation in your dataset. How could you address the
deviation(s)? (1+1= 2 marks).
 b) How much variation in the delivery cost for a marketing campaign is not explained
by the considered factors? Compare it with the t-distribution table results and
explain. (2 marks)
c) In the absence of these factors what would be the best estimate of the delivery cost
for a marketing campaign? (2 mark)

Option II: If your data does not show any pattern in the residuals

a). How much variation in the delivery cost for a marketing campaign is explained by
the considered factors? (1+1= 2marks)

If your value is less than 0.5, explain possible reasons behind such low variance?

If your value is greater than 0.5, explain possible reasons behind such high
variance?

b). Estimate the delivery cost for a marketing campaign that takes 10 hours of delivery
time and 22 hours of preparation time. (2 marks)

c). In the absence of these factors what would be the best estimate of the delivery cost
for a marketing campaign? (2 mark)

********************** Done & Dusted *********************