Session 1

Probability

Probability provides a mathematical foundation for dealing with uncertainty, enabling

businesses to make more informed, rational, and strategic decisions.

1. Risk Assessment and Management:

o This is particularly important in areas such as investment decisions, project
management, and insurance.
2. Forecasting and Planning:
o This is particularly important in areas such as sales forecasting, demand
planning, and financial projections often rely on probabilistic models to
predict future performance and plan accordingly.
3. Marketing and Consumer Behavior:
o Probability helps in understanding consumer behavior and preferences.
Businesses use probabilistic models to analyze market research data, segment
customers, and predict the success of marketing campaigns.
4. Financial Decision-Making:
o In finance, probability is essential for evaluating investment opportunities,
pricing financial instruments, and managing portfolios. Techniques such as
value at risk (VaR), option pricing models, and credit risk assessment rely
heavily on probabilistic concepts.
5. Supply Chain Management:
o Probability is used to optimize supply chain operations by predicting demand
variability, lead times, and inventory levels. This helps in reducing costs,
minimizing stockouts, and improving overall supply chain efficiency.

The probability of given event may be defined as the numerical value given to the likely hood
of the occurrence of that event.

Random Experiment

A random experiment is an experiment that has two or more outcomes which vary in an
unpredictable manner from trial to trail when conducted under uniform conditions.
Mutually exclusive events are those events that do not occur at the same time.
For example, when a coin is tossed then the result will be either head or tail, but we cannot
get both the results.
Independent events are those events whose occurrence is not dependent on any other event.
For example, if we flip a coin in the air and get the outcome as Head, then again if we flip the
coin but this time we get the outcome as Tail.
 Session 2
Job Applications

A business graduate wants to get a job in any one of the top 10 accounting firms. Applying to any of
these companies requires a lot of effort and paperwork and is therefore costly. She estimates the
cost of applying to each of the 10 companies and the probability of getting a job offer there. These
data are tabulated below. The tabulation is in the decreasing order of cost.

1. If the graduate applies to all 10 companies, what is the probability that she will get at least
one offer?
2. If she can apply to only one company, based on cost and success probability criteria alone,
should she apply to company 5? Why or why not?
3. If she applies to companies 2, 5, 8, and 9, what is the total cost? What is the probability that
she will get at least one offer?
4. If she wants to be at least 75% confident of getting at least one offer, to which companies
should she apply to minimize the total cost?
5. If she is willing to spend $1,500, to which companies should she apply to maximize her
chances of getting at least one job?
 Session 3
Addition Rule Formula
When calculating the probability of either one of two events from occurring, it is as simple as
adding the probability of each event and then subtracting the probability of both of the events
occurring:
P(A or B) = P(A) + P(B) - P(A and B)
P(A∪B) = P(A) + P(B) − P(A∩B)
Mutually Exclusive events- P(A∩B)=0
A={H}
B={T}
A∩B=0
Non Mutually Exclusive events

P(Cricket)=17/45
P (Badminton)=19/45
P (Badminton ∩ Cricket)=8/45
P (Badminton ∪ Cricket)= P(Cricket) + P (Badminton) - P (Badminton ∩ Cricket)

Problem 1: In a deck with 52 cards, what is the possibility of drawing a spade or a face card
in two independent drawings?

Problem 2:
A company runs two different marketing campaigns. From past data, it knows: The
probability that a customer responds to Campaign A is 0.30. The probability that a customer
responds to Campaign B is 0.40. The probability that a customer responds to both
Campaign A and Campaign B is 0.15. What is the probability that a customer responds to at
least one of the campaigns?
Problem 3
A bank finds that 15% of its loan applicants are approved for a loan, and 20% are approved for a
credit card. The probability that an applicant is approved for both is 5%. What is the probability that
an applicant is approved for at least one of the services?

Conditional probability (Dependent events)

P(HS)=0.4, P(HS ∩ SD)=0.2, P(SD∣HS)=0.2/0.4=0.5

It is the probability of an event occurring given that another event has already occurred. It is
denoted by P(A∣B), which reads as "the probability of A given B."
P(A∣B) = P(A∩B)/P(B), assuming P(B) ≠ 0.

Where, P(A∩B) is the probability that both events A and B occur.

 P(B) is the probability that event B occurs.

Problem 1. Suppose that we have two events, A and B, with P(A) = 0.5, P(B) = 0.6, and P(A
∩ B) =0.4.

a. Find P(A ∣ B).

b. Find P(B ∣ A).

c. Are A and B independent? Why or why not?

Problem 2:
Suppose a company wants to determine the probability that a product will be returned (event A)
given that it was purchased online (event B).
Assume the company has the following data:
Total products sold: 10,000
Products purchased online: 4,000
Products returned: 500
Products purchased online and returned: 300
Problem 3: A factory produces 1,000 units of a product per day. Out of these, 50 units are
found to be defective. During a quality control test, 40 defective units were identified. What is
the probability that a product is defective given that it failed the quality control test?
Problem 4: A bank has data showing that 10% of its loan applicants have a credit score below 600.
Among those with a credit score below 600, 40% default on their loans. What is the probability that
a loan applicant will default given that their credit score is below 600?

Problem 5: A retailer has data showing that the demand for a particular product exceeds the
forecast by 20% about 15% of the time. When this happens, the product is out of stock 25% of
the time. What is the probability that the product will be out of stock given that its demand has
exceeded the forecast by 20%?

Conditional probability (Independent events)

When two events are statistically independent, the occurrence of one event does not affect the
probability of the other event occurring.
P(A∩B) = P(A)×P(B)

Problem 6:
A company runs a marketing campaign to promote a product. Simultaneously, the quality
control team is checking for defects in the products. Historical data shows that 20% of
customers respond to the marketing campaign and 5% of products are defective. What is the
probability that a randomly selected product will be both sold to a customer who responded
to the campaign and defective?
Problem 7:
In a company, 30% of employees have undergone advanced training. Separately, 25% of
employees have been promoted within the last year. Assuming that undergoing advanced
training and getting promoted are independent events, what is the probability that a
randomly selected employee has undergone advanced training and has been promoted?
Problem 8:
A company finds that 15% of its website visitors make a purchase (sales conversion). Separately,
10% of its customers refer another customer. Assuming that making a purchase and referring
another customer are independent events, what is the probability that a randomly selected
website visitor will make a purchase and refer another customer?
Session-4
Bayes’ Theorem (Revise/reversed probability)
Bayes’ Theorem is used to determine the conditional probability (Reverse probability) of an
event. It was named after an English statistician, Thomas Bayes who discovered this formula
in 1763.
Prior probabilities represent the initial beliefs or estimates about the probability of an event
occurring before any new evidence or data is taken into account.
New Evidence-New information
Posterior (Revise/reversed) probabilities represent the updated probability of an event
occurring after taking into account new evidence or data.

Bayes' Theorem states for single event case:

P(B|A)P(A)
P(A∣B)=
P(B)
Problem 9:
A company wants to know how likely a customer is to buy a product given that they clicked on an
online ad. Historically, 5% of visitors buy the product, and 20% of visitors click on the ad.
However, 60% of those who had clicked on the ad and eventually bought the product.

Problem 10:
Consider a manufacturing firm that receives shipments of parts from two different suppliers. let
A1 denote the event that a part is from supplier 1 and A2 denote the event that a part is from
supplier 2. Currently, 65% of the parts purchased by the company are from supplier 1 and the
remaining 35% are from supplier 2.

Suppose now that the parts from the two suppliers are used in the firm’s manufacturing process
and that a machine breaks down because it attempts to process a bad part. Given the information
that the part is bad, what is the probability that it came from supplier 1 and what is the
probability that it came from supplier 2?
Bayes' Theorem states for two event case:

Problem 11.

Problem 12
A consulting firm submitted a bid for a large research project. The firm’s management initially felt
they had a 50–50 chance of getting the project. However, the agency to which the bid was
submitted subsequently requested additional information on the bid. Past experience indicates
that for 75% of the successful bids and 40% of the unsuccessful bids the agency requested
additional information.
a. What is the prior probability of the bid being successful (that is, prior to the request for
additional information)?
b. What is the conditional probability of a request for additional information given that the bid
will ultimately be successful?
c. Compute the posterior probability that the bid will be successful given a request for
additional information.
 Session 5
RANDOM VARIABLE
Random variables must A random variable is a numerical description of the outcome of an
experiment.

A discrete random variable is a type of random variable that can take on a finite or countable
number of distinct values.

A random variable that may assume any numerical value in an interval or collection of intervals
is called a continuous random variable.

Problem 13
Three students scheduled interviews for summer employment at the IILM University. In each case
the interview results in either an offer for a position or no offer. Experimental outcomes are
defined in terms of the results of the three interviews.
a. List the experimental outcomes.
b. Define a random variable that represents the number of offers made. Is the random
variable continuous?
c. Show the value of the random variable for each of the experimental outcomes.
Developing Discrete Probability Distributions
The probability distribution
for a random variable describes how probabilities are distributed
over the values of the random variable. for a discrete random variable x, a probability function,
denoted by f (x), provides the probability for each value of the random variable.
Example: Probability distribution for the number of automobiles sold during a day at Car
Showroom
Problem 14:

Problem 15. The following data were collected by counting the number of operating rooms in use
at Tampa general Hospital over a 20-day period: On three of the days only one operating room was
used, on five of the days two were used, on eight of the days three were used, and on four days all
four of the hospital’s operating rooms were used.
a. Use the relative frequency approach to construct an empirical discrete probability
distribution for the number of operating rooms in use on any given day.
b. Draw a graph of the probability distribution.
c. Show that your probability distribution satisfies the required conditions for a valid discrete
probability distribution.

Expected Value
The expected value, or mean, of a random variable is a measure of the central location for the
random variable.

Variance
It measures variability or dispersion of a random variable.

Standard deviation is defined as the positive square root of the variance.

Problem 16:

Problem 17. The probability distribution for damage claims paid by the Newton Automobile
Insurance Company on collision insurance follows.
Payment ($) Probability
0 500 .85
1000 .04
3000 .04
5000 .03
8000 .02
10000 .01
.01

a. Use the expected collision payment to determine the collision insurance premium that would
enable the company to break even.
b. The insurance company charges an annual rate of $520 for the collision coverage. What is
the expected value of the collision policy for a policyholder?
Problem 18: The demand for a product of Carolina Industries varies greatly from month to
month. The probability distribution in the following table, based on the past two years of data,
shows the company’s monthly demand.

Unit Demand Probability

300 .20
400 .30
500 .35
600 .15

a. If the company bases monthly orders on the expected value of the monthly demand, what
should Carolina’s monthly order quantity be for this product?
b. Assume that each unit demanded generates $70 in revenue and that each unit ordered costs
$50. How much will the company gain or lose in a month if it places an order based on your
answer to part (a) and the actual demand for the item is 300 units?
 Session 6-7
Binomial probability distribution
Scenario: A company manufactures light bulbs, and it is known from historical data that 5%
of all light bulbs produced are defective. A quality control manager randomly selects 10 light
bulbs from a production batch to inspect. What is the probability that exactly 2 out of the 10
light bulbs selected are defective?

Problem 19: Consider a binomial experiment with two trials and p = .4.
a. Compute the probability of one success, f (1).
b. Compute f (0).
c. Compute f (2). d. Compute the probability of at least one success. e. Compute the expected
value, variance, and standard deviation. Problem 20: Market-share-analysis company Net
Applications monitors and reports on
Internet browser usage. According to Net Applications, in the summer of 2014, google’s
Chrome browser exceeded a 20% market share for the first time, with a 20.37% share of the
browser market (Forbes website, December 15, 2014). For a randomly selected group of 20
Internet browser users, answer the following questions. a. Compute the probability that exactly 8
of the 20 Internet browser users use Chrome as their
Internet browser.
b. Compute the probability that at least 3 of the 20 Internet browser users use Chrome as their
Internet browser.
c. for the sample of 20 Internet browser users, compute the expected number of Chrome users.
d. for the sample of 20 Internet browser users, compute the variance and standard deviation for
the number of Chrome users.
THE BINOMIAL PROBABILITY TABE

Problem 21: The Center for Medicare and Medical Services reported that there were 295,000
appeals for hospitalization and other Part A Medicare service. for this group, 40% of first-round
appeals were successful (the wall street Journal, October 22, 2012). Suppose 10 first round
appeals have just been received by a Medicare appeals office.
a. Compute the probability that none of the appeals will be successful.
b. Compute the probability that exactly one of the appeals will be successful.
c. what is the probability that at least two of the appeals will be successful?
d. what is the probability that more than half of the appeals will be successful?
 Sessions 8-9
Poisson Probability Distribution

Mean of the Poisson distribution and the variance of the distribution are equal.

Problem 22:
Suppose that you are interested in the number of arrivals at the drive-up teller window of a
bank during a 15-minute period on weekday mornings. An analysis of historical data shows that
the average number of cars arriving in a 15-minute period of time is 10. Management wanted to
know the probability of exactly five arrivals in 15 minutes.

Problem 23: A bakery sells an average of 7 cakes per hour. What is the probability that the
bakery will sell at most 2 cakes in a given hour?

Problem 24: Airline passengers arrive randomly and independently at the passenger-screening
facility at a major international airport. The mean arrival rate is 10 passengers per minute.
a. Compute the probability of no arrivals in a one-minute period.
b. Compute the probability that three or fewer passengers arrive in a one-minute period.
c. Compute the probability of no arrivals in a 15-second period.
d. Compute the probability of at least one arrival in a 15-second period.
 Exponential Probability Distribution
The Exponential Probability Distribution is used to model the time between events in a
Poisson process. It describes the time between events in a process where events occur
continuously and independently at a constant average rate.

Ex. A call center receives calls at an average rate of 3 per minute. What is the probability that
the next call will arrive in more than 1 minute?

Key Characteristics of the Exponential Distribution:

 The parameter λ (rate parameter) represents the average rate of events per unit time.
 The mean (expected time between events) is 1/λ.
 The probability density function (PDF) is:

f(x)=λ×e−λx, x≥0,
where x is the time between events and λ is the rate parameter.
 The expected time between events is E(X)=1/λ .
 The variance is Var(X)=1/λ2.

The probability that the next event (call) occurs after a given time ‘x’ is given by:

f(X>x)=e −λx

Problem 25: A call center receives calls at an average rate of 3 per minute. What is the
probability that the next call will arrive in more than 1 minute?

Problem 26: Suppose the average time between failures in a machine is 4 hours. What is the
probability that the machine will run for more than 6 hours without a failure?

Cumulative Distribution Function (CDF): The probability that the time between events is
less than or equal to a specific value x is given by:
F(x)=P(X≤x)=1−e −λx, x≥0

Problem 27: A mechanic shop receives customers at a rate of 2 customers per hour. What is
the probability that the next customer will arrive within 30 minutes?
Sessions 10
Flight time of an airplane traveling from Delhi to Bangaluru can be any value in the interval
from 120 minutes to 140 minutes. Sufficient actual flight data are available to conclude that
the probability of a flight time within any 1minute interval is the same as the probability of a
flight time within any other 1minute interval contained in the larger interval from 120 to 140
minutes.
Flight time, random variable x can assume any value in that interval, x is a continuous rather
than a discrete random variable.

With every 1-minute interval being equally likely, the random variable x is said to have a
uniform probability distribution.
The probability density function, which defines the uniform distribution for the flight time
random variable, is:

Area as a Measure of Probability

P(120 ≤ x ≤130)?

Problem 28. The random variable x is known to be uniformly distributed between 1.0 and 1.5.
a. Show the graph of the probability density function.
b. Compute P(x = 1.25)
c. Compute P(1.0 ≤ x ≤ 1.25)
d. Compute P(1.20 < x < 1.5)
Problem 29. Most computer languages include a function that can be used to generate random
numbers. In Excel, the RAND function can be used to generate random numbers between 0 and 1.
If we let x denote a random number generated using RAND, then x is a continuous random variable
with the following probability density function.

a. Graph the probability density function.

b. what is the probability of generating a random number between .25 and .75?
c. what is the probability of generating a random number with a value less than or equal to .30?
d. what is the probability of generating a random number with a value greater than .60?
e. Generate 1000 random numbers by entering =RAND() into 1000 cells of an Excel worksheet.
f. Compute the mean and standard deviation for the random numbers in part (e).

Problem 30.
Delta Airlines quotes a flight time of 2 hours, 10 minutes for its flights from
Cincinnati to Tampa. Suppose we believe that actual flight times are uniformly distributed
between 2 hours and 2 hours, 30 minutes.
a. Show the graph of the probability density function for flight time.
b. what is the probability that the flight will be no more than 5 minutes late?
c. what is the probability that the flight will be more than 10 minutes late?
d. what is the expected flight time?

Please provide details Faculty Performance, Appraisal and Development System

and
wworkshop/training conducted for the same. The workshop/training details shall
include details such as program title, description, duration, resource person, type of training,
training methodology, participants, etc.
Mention details separately for the programs organized and the programs participated outside
the institution.
 Sessions 11-12
Normal Probability Distribution

Normal distribution, is a probability distribution that appears as a "bell curve" when graphed. It is
the most significant continuous probability distribution. The normal distribution describes a
symmetrical plot of data around its mean value, where the width of the curve is defined by the
standard deviation.

Properties
 Bell shaped
 Symmetrical
 Unimodal – it has one “peak”
 Mean and median are equal; both are located at the center of the distribution
 About 68% of data falls within one standard deviation of the mean
 About 95% of data falls within two standard deviations of the mean
 About 99.7% of data falls within three standard deviations of the mean
Problem 31: Sketch a normal curve for a random variable x that has a mean of m = 100 and a
standard deviation of s = 10. Label the horizontal axis with values of 70, 80, 90, 100, 110, 120, and
130.
Problem 32: A random variable is normally distributed with a mean of m = 50 and a standard
deviation of s = 5.
 a. Sketch a normal curve for the probability density function. Label the horizontal axis
with values of 35, 40, 45, 50, 55, 60, and 65.
b. what is the probability the random variable will assume a value between 45 and 55? c.
what is the probability the random variable will assume a value between 40 and 60?

Problem 33:
The mean cost of domestic airfares in the United States rose to an all-time high
of $385 per ticket (Bureau of Transportation Statistics website, November 2, 2012). Airfares
were based on the total ticket value, which consisted of the price charged by the airlines plus
any additional taxes and fees. Assume domestic airfares are normally distributed with a
standard deviation of $110.
a. what is the probability that a domestic airfare is $495 or more?
b. what is the probability that a domestic airfare is $550 or more?
c. what is the probability that a domestic airfare is $250 or less?
d. what is the probability that a domestic airfare is between $300 and $500?
Problem 34: Draw a graph for the standard normal distribution. Label the horizontal axis at
values of −3, −2, −1, 0, 1, 2, and 3. Then use the table of probabilities for the standard normal
distribution inside the front cover of the text to compute the following probabilities.
a. P(z ≤ 1.5)
b. P(z ≤ 1)

c. P(1 ≤ z ≤ 1.5)
d. P(0 < z < 2.5)
Problem 35: Given that z is a standard normal random variable, compute the following
probabilities.
a. P(z ≤ −1.0)
b. P(z ≥ −1)

c. P(z ≥ −1.5)
d. P(−2.5 ≤ z)

e. P(−3 < z ≤ 0)
Problem 36. Average height is 165 cm & Standard deviation is 15.
a) What is probability that the height will be more than 170 cm?
b) What is probability that the height will be less than 155 cm?
c) What is probability that the height will be less than 160 cm-175 cm? Problem 37: The average
return for large cap domestic stock funds over the three years 2009–
2011was 14.4% (aaii Journal, February, 2012). Assume the three year returns were normally
distributed across funds with a standard deviation of 4.4%. a. what is the probability an individual
large cap domestic stock fund had a three year return of
at least 20%?
b. what is the probability an individual large cap domestic stock fund had a three year return of
10% or less?
c. how big does the return have to be to put a domestic stock fund in the top 10% for the three
year period?
 Session 13
Sampling and Sampling Methods
Population vs. Sample:
 Population: The entire group you're interested in (e.g., all employees in a company).
 Sample: A subset of the population (e.g., a random selection of 100 employees).
Ex. Members of a political party in Texas were considering supporting a particular candidate
for election to the Loksabha, and party leaders wanted to estimate the proportion of registered
voters in the state favouring the candidate. A sample of 4000 registered voters in a constituency
was selected and 1600 of the 4000 voters indicated a preference for the candidate. Thus, an
estimate of the proportion of the population of registered voters favouring the candidate is
1600/4000 = 0.40.
We do not expect exactly .40, or 40%, of the population of registered voters to favour the
candidate

SIMPLE RANDOM SAMPLE (FINITE POPULATION)

A simple random sample of size n from a finite population of size n is a sample selected such
that each possible sample of size n has the same probability of being selected.

RANDOM SAMPLE (INFINITE POPULATION)

A random sample of size n from an infinite population is a sample selected such that
the following conditions are satisfied.
1. Each element selected comes from the same population.
2. Each element is selected independently.

Probability Sampling Methods

1. Simple Random Sampling
 Description : Each member of the population has an equal chance of being selected.

Example : A company wants to survey employee satisfaction. They have a list of 500
employees and randomly select 100 employees using a random number generator.
2. Systematic Sampling
 Description : Every nth member of the population is selected after a random starting
point.
 Example: A factory has 1,000 products on the production line. To perform quality control,
they decide to inspect every 10th product starting at a randomly chosen number between
1 and 10.
3. Stratified Sampling
Description

 : The population is divided into strata (subgroups) based on shared

characteristics (e.g., age, income), and then a random sample is taken from each
stratum.
 Example: A researcher wants to understand the opinion of high school students about
online learning. They divide the students into grades (9th, 10th, 11th, 12th) and
randomly select 25 students from each grade for the study.
4. Cluster Sampling
Description
 : The population is divided into clusters, often geographically, and a
random sample of clusters is selected. All members within the selected clusters are
surveyed.
 Example: A researcher wants to conduct a study on healthcare facilities across the
country. They divide the country into regions (clusters) and randomly select 3 regions.
They survey all healthcare facilities within those 3 regions.

Example 1: Educational Research

A university wants to study the job placement rates of graduates. The population is divided
into groups based on majors (e.g., Engineering, Business, Humanities, Sciences). The
researchers randomly select a fixed number of graduates from each major to analyze the
differences in job placement rates across fields.
Example 2: Customer Feedback
A retail chain wants to gather customer feedback on store experience. The population of
customers is divided into age groups (e.g., 18-29, 30-44, 45-60, and 60+). Then, a random
sample of customers is selected from each age group to ensure all age ranges are represented
in the feedback.
Example 3: Political Survey
A polling agency wants to measure voter preference. The population is stratified by regions
(e.g., North, South, East, West), and a random sample of voters is selected from each region.
This ensures that the poll reflects geographic diversity in voter preferences.
Example 4: Health Study
A researcher is conducting a study on diabetes prevalence. The population is divided into
groups based on income levels (low, middle, high). A random sample of participants from
each income level is selected to determine how income affects diabetes rates.
Example 5: School District Study
A researcher wants to study the performance of students across a state. The state is divided
into school districts. The researcher randomly selects 10 districts, and surveys all students in
those selected districts. This way, only some clusters are selected, but all individuals in those
clusters are included.
Example 6: National Health Survey
A national health organization wants to collect data on nutrition and health. The country is
divided into cities (clusters), and a random sample of cities is chosen. Within each selected
city, all residents in selected neighbourhoods are surveyed. This reduces the logistical effort
of surveying everyone nationwide.

Example 7: Employee Satisfaction Survey

A large multinational company wants to evaluate employee satisfaction. The company has
offices in multiple countries. The offices in different countries are considered as clusters. The
company randomly selects a few countries and surveys all employees in the selected
countries rather than surveying employees in all locations.
Example 8: Agricultural Study
An agricultural agency wants to analyze crop yield in a country. The country is divided into
regions, and several regions are randomly selected. All farms in the selected regions are
studied to evaluate the differences in crop yield across regions.

Non-probability Sampling Methods

Probability sampling involves random selection, allowing you to make strong statistical
inferences about the whole group. Non-probability sampling involves non-random selection
based on convenience or other criteria, allowing you to easily collect data.
Probability sampling gives every member of a population an equal chance of being
selected, while non-probability sampling does not
1. Convenience Sampling

 Description : The sample is selected based on availability and willingness to

participate. It's the easiest and quickest method, but it may not represent the broader
population.
 Example: A researcher stands outside a shopping mall and surveys the first 50 people
who are willing to participate in the study on consumer preferences.
2. Quota Sampling
 Description : The population is divided into subgroups (quotas), and participants are
selected until a predetermined number (quota) from each subgroup is met. It is similar
to stratified sampling but without random selection.
 Example: A market researcher is tasked with gathering opinions from 100 people,
ensuring that 50 are men and 50 are women. The researcher continues to sample until
these quotas are filled, regardless of how representative the sample is within the
broader population.
3. Snowball Sampling
 Description : Participants recruit other participants from their acquaintances or
networks, often used for hard-to-reach populations.
 Example: A sociologist studying a community of homeless individuals asks one
participant for referrals to others in the same situation. As the sample grows,
participants continue to recruit others, creating a "snowball" effect.
 Session 14-15: Sampling Distribution
Electronics Associates Sampling Problem
Electronics Associates, Inc. (EAI), has 250,000 employees.
Population mean: µ = $51,800
Population standard deviation: σ = $4000
The data for the training program status show that 150,000 of the 250,000 employees
completed the training program.

Participated in Participated in
Annual training Annual training
Employee Salary program Employee Salary program
x1 48,094.30 yes x16 50,766.00 yes
x2 52,263.90 yes x17 51,541.30 no
x3 48,643.50 yes x18 43,980.00 yes
x4 48,894.90 yes x19 50,932.60 yes
x5 46,621.60 no x20 51,973.00 yes
54,924.00 yes 44,120.90 yes
x6 x21
48,092.30 yes 50,753.00 Yes
x7 x22
no no
x8 50,404.40 x23 53,391.80
yes no
x9 49,957.70 x24 49,164.20
yes no
x10 54,109.70 x25 51,973.60
no no
x11 44,922.60 x26 49,241.30
no no
x12 56,268.40 x27 51,793.90
yes yes
x13 54,688.80 x28 49,979.40
no yes
x14 50,564.70 x29 54,860.90
no no
x15 55,188.20 x30 56,309.10

Population mean µ = $51,800 Sample mean (x bar)

Population standard deviation σ = $4000 Sample standard deviation (s)
Problem 38: The National Football League (NFL) polls fans to develop a rating for each
football game NFL website, October 24, 2012). Each game is rated on a scale from 0
(forgettable) to 100 (memorable). The fan ratings for a random sample of 12 games follow.
57 61 86 74 72 73 20 57 80 79 83 74
a. Develop a point estimate of mean fan rating for the population of NFL games.
b. Develop a point estimate of the standard deviation for the population of NFL games.

2nd Sample mean: $52,670

2nd Sample
0.7
proportion:
 Sampling distribution of sample mean

Standard Error: Standard error refers to the standard deviation of a point estimator.

Infinite population formula is applicable whenever

1. The population is infinite; or
2. The population is finite and the sample size is less than or equal to 5% of the
population size; that is, n/N ≤ 0.05.

Problem 39: Assume the population standard deviation is 25. Compute the standard error of
the mean, for sample sizes of 50, 100, 150, and 200. What can you say about the size of the
standard error of the mean as the sample size is increased?
Whenever the sample size is increased, the standard error of the mean decreases

Problem 40: Barron’s reported that the average number of weeks an individual is unemployed is
17.5 weeks. Assume that for the population of all unemployed individuals the population mean
length of unemployment is 17.5 weeks and that the population standard deviation is 4 weeks.
Suppose you would like to select a sample of 50 unemployed individuals for a follow- up study.
a. Show the sampling distribution of x, the sample mean average for a sample of 50
unemployed individuals.
b. What is the probability that a simple random sample of 50 unemployed individuals will
provide a sample mean within 1 week of the population mean?
c. What is the probability that a simple random sample of 50 unemployed individuals will
provide a sample mean within 1/2 week of the population mean?
 Why Sample size should be 30?

Sampling distribution of sample proportion

The sampling distribution of proportion is the probability distribution of all possible values of
the sample proportion.
The sampling distribution of proportion mean can be approximated by a normal distribution
whenever,
np ≥ 5 and n(1 − p) ≥ 5.

Question: PROBABILITY OF OBTAINING proportion mean BETWEEN .55 AND .65

Problem 41. A sample of size 100 is selected from a population with p = .40.
a. What is the expected value of proportion mean?
b. What is the standard error of proportion mean?
c. Show the sampling distribution of proportion mean.
d. What does the sampling distribution of proportion mean show?

Problem 42: A population proportion is .40. A sample of size 200 will be taken and the
sample proportion will be used to estimate the population proportion.
a. What is the probability that the sample proportion will be within ±.03 of the population
proportion?
b. What is the probability ±.05 of the population proportion?
Sessions: 16-17
Interval estimation & Determination of sample size
The purpose of an interval estimate is to provide information about how close the point
estimate, provided by the sample, is to the value of the population parameter.
In this chapter we show how to compute interval estimates of a population mean µ and a
population proportion p. The general form of an interval estimate of a population mean is

x̅̅ ± Margin of error

Similarly, the general form of an interval estimate of a population proportion is
p- ± Margin of error
The sampling distributions of x and p play key roles in computing these interval estimates.

Problem 43: Each week Lloyd’s Department Store selects a simple random sample of 100
customers in order to learn about the amount spent per shopping trip. With x representing the
amount spent per shopping trip, the sample mean x provides a point estimate of µ, the mean
amount spent per shopping trip for the population of all Lloyd’s customers. Lloyd’s has been
using the weekly survey for several years. based on the historical data, Lloyd’s now assumes a
known value of σ = $20 for the population standard deviation. The historical data also indicate
that the population follows a normal distribution.
During the most recent week, Lloyd’s surveyed 100 customers (n = 100) and obtained a sample
mean of x̅̅ = $82. The sample mean amount spent provides a point estimate of the population
mean amount spent per shopping trip, µ.
Compute the margin of error for this estimate and develop an interval estimate of the population
mean.
Problem 44: A simple random sample of 50 items from a population with σ = 6 resulted in a
sample mean of 32.
a. Provide a 90% confidence interval for the population mean.
b. Provide a 95% confidence interval for the population mean.
c. Provide a 99% confidence interval for the population mean

Problem 45: A simple random sample of 60 items resulted in a sample mean of 80. The
population standard deviation is σ = 15.
a. Compute the 95% confidence interval for the population mean.
b. Assume that the same sample mean was obtained from a sample of 120 items. Provide a 95%
confidence interval for the population mean.
c. What is the effect of a larger sample size on the interval estimate?

Problem 46: Data were collected on the amount spent by 64 customers for lunch at a major
Houston restaurant. The sample mean is $40. These data are contained in the file named
Houston. based upon past studies the population standard deviation is known with σ = $6. a. At
99% confidence, what is the margin of error? b. Develop a 99% confidence interval estimate of the
mean amount spent for lunch with sample
mean of 40.

Problem 47: For a t distribution with 16 degrees of freedom, find the area, or probability, in
each region.
a. To the right of 2.120
b. To the left of 1.337
c. To the left of −1.746
d. To the right of 2.583
e. between −2.120 and 2.120
f. between −1.746 and 1.746 Problem 48: Find the t value(s) for each of the following
cases. a. Upper tail area of .025 with 12 degrees of freedom
b. Lower tail area of .05 with 50 degrees of freedom
c. Upper tail area of .01 with 30 degrees of freedom
d. Where 90% of the area falls between these two t values with 25 degrees of freedom
e. Where 95% of the area falls between these two t values with 45 degrees of freedom

Problem 49: The following sample data are from a normal population: 10, 8, 12, 15, 13, 11, 6,
5.
a. What is the point estimate of the population mean?
b. What is the point estimate of the population standard deviation?
c. With 95% confidence, what is the margin of error for the estimation of the population mean?
d. What is the 95% confidence interval for the population mean?

Problem 50: Scheer Industries is considering a new computer-assisted program to train

maintenance employees to do machine repairs. In order to fully evaluate the program, the
director of manufacturing requested an estimate of the population mean time required for
maintenance employees to complete the computer-assisted training. A sample of 20 employees
is selected, with each employee in the sample completing the training program. Data on the
training time in days for the 20 employees are shown in Table. What is the 95% confidence
interval for the population mean?
Problem 51: How large a sample should be selected to provide a 95% confidence interval with a
margin of error of 10? Assume that the population standard deviation is 40.
Problem 52: The range for a set of data is estimated to be 36.
a. What is the planning value for the population standard deviation?
b. At 95% confidence, how large a sample would provide a margin of error of 3?
c. At 95% confidence, how large a sample would provide a margin of error of 2?
Sessions: 18-21
Hypothesis Testing
Hypothesis testing is a systematic procedure for deciding whether the results of a research study
support a particular theory which applies to a population. Hypothesis testing uses sample data
to evaluate a hypothesis about a population.
Null hypothesis (H0): There’s no effect in the population.
Alternative hypothesis (Ha or H1): There’s an effect in the population.
Formulate Hypotheses

1. A company is launching a new product and wants to test if the new advertising campaign has
increased awareness among potential customers compared to the previous campaign.
Formulate the null and alternative hypotheses to test the effectiveness of the new campaign.

2. A company wants to test whether the market share of their product has decreased after
a competitor launched a new product. Formulate the hypotheses for this situation.

Problem 53. The manager of the Danvers-Hilton resort Hotel stated that the mean guest bill for a
weekend is $600 or greater. A member of the hotel’s accounting staff noticed that the total
charges for guest bills have been decreasing in recent months. The accountant wants to use a
sample of future weekend guest bills to test the manager’s claim. Develop the appropriate null
and alternative hypotheses.

Problem 54. The label on a 3-quart container of orange juice states that the orange juice
contains an average of 1 gram of fat or lesser. Develop the appropriate null and alternative
hypotheses that could be used to test the claim on the label.
Problem 55. The mean hourly wage for employees in goods-producing industries is currently
$24.57. Suppose we take a sample of employees from the manufacturing industry to see if the
mean hourly wage differs from the reported mean of $24.57 for the goods-producing industries.
State the null and alternative hypotheses we should use to test whether the population mean
hourly wage in the manufacturing industry differs from the population mean hourly wage in
the goods-producing industries.

a. What is the type I error?

b. What is the type II error?

Type I error (false positive): the test result says you have coronavirus, but you actually don’t.

You have rejected Null hypothesis, while it was true, generates Type I error= α
You have accepted Null hypothesis, while it was false, generates Type II error= beta
Type II error (false negative): the test result says you don’t have coronavirus, but you actually
do.

Population Mean: Known

Problem 56. Consider the following hypothesis test:
H0: µ ≥ 20
Ha: µ < 20
A sample of 50 provided a sample mean of 19.4. the population standard deviation is 2.
a. Compute the value of the test statistic.
b. What is the p-value?
c. Using α = 0.05, what is your conclusion?
d. What is the rejection rule using the critical value? what is your conclusion?
Problem 57. Consider the following hypothesis test:
H0: µ ≤ 25
Ha: µ > 25
A sample of 40 provided a sample mean of 26.4. the population standard deviation is 6.
a. Compute the value of the test statistic.
b. What is the p-value?
c. At α = 0.01, what is your conclusion?
d. What is the rejection rule using the critical value? what is your conclusion?

Problem 58. consider the following hypothesis test:

H0: µ = 15
Ha: µ ≠ 15
A sample of 50 provided a sample mean of 14.15. the population standard deviation is 3.
a. Compute the value of the test statistic.
b. What is the p-value?
c. At α = 0.05, what is your conclusion?
d. what is the rejection rule using the critical value? what is your conclusion?

Population Mean: Unknown

Problem 59. The mean hourly wage for employees in goods-producing industries is currently
$24.57. Suppose we take a sample of employees from the manufacturing industry to see if the
mean hourly wage differs from the reported mean of $24.57 for the goods-producing industries.
a. State the null and alternative hypotheses we should use to test whether the population mean
hourly wage in the manufacturing industry differs from the population mean hourly wage in
the goods-producing industries. b. Suppose a sample of 30 employees from the manufacturing
industry showed a sample mean
of $23.89 per hour, the sample standard deviation is $2.40 per hour and compute the p-value.
c. With α = 0.05 as the level of significance, what is your conclusion?
d. Repeat the preceding hypothesis test using the critical value approach.

Problem 60. Consider the following hypothesis test:

A sample of 25 provided a sample mean x = 14 and a sample standard deviation s = 4.32.

H0: µ ≤ 12
Ha: µ > 12
a. Compute the value of the test statistic.
b. Use the t distribution table to compute a range for the p-value.
c. At α = 0.05, what is your conclusion?
d. what is the rejection rule using the critical value? what is your conclusion?
Problem 61.. A shareholders’ group, in lodging a protest, claimed that the mean tenure for a chief
executive officer (CEO) was at least nine years. a survey of companies reported in the Wall Street
Journal found a sample mean tenure of x = 7.27 years for CEOs with a standard deviation of s =
6.38 years.
a. Formulate hypotheses that can be used to challenge the validity of the claim made by the
shareholders’ group.
b. assume 85 companies were included in the sample. what is the p-value for your hypothesis
test?
c. At α = 0.01, what is your conclusion?

Problem 62. Consider the following hypothesis test:

A sample of 48 provided a sample mean x = 17 and a sample standard deviation s = 4.5.
H0: µ = 18
Ha: µ ≠ 18
a. Compute the value of the test statistic.
b. Use the t distribution table to compute a range for the p-value.
c. At α = 0.05, what is your conclusion?
d. what is the rejection rule using the critical value? what is your conclusion?
 Sessions 22-23
Linear Regression
Problem 63. Armand’s Pizza Parlor restaurants located near college campuses. The quarterly
sale and corresponding number of students data shown in table below. For the ith observation
or restaurant, xi is the size of the student population (in thousands) and yi is the quarterly sales
(in thousands of dollars). Formulate the straight-line equation that is best fit for data. The owner
wants to open 11th Pizza Parlor restaurant, find the quarterly sale, if number of students are
18,000.
Dependent variable: In regression terminology, the variable being predicted is called the
dependent variable.
Independent variables:
The variable or variables being used to predict the value of the
dependent variable are called the independent variables.
 Regression Statistics
Multiple R 0.950122955
R Square 0.90273363

Adjusted R Square 0.890575334

Standard Error 13.82931669
Observations 10

F TEST FOR SIGNIFICANCE

ANOVA
df SS MS F Significance F
Regression 1 14200 14200 74.24837 2.54887E-05
Residual 8 1530 191.25
Total 9 15730

Standard
Error
Coefficients t Stat P-value Lower 95%
9.22603481
Intercept 60 6.503335532 0.000187 38.72472558
0.580265238
X Variable 1 5 8.616749156 2.55E-05 3.661905962

p Values

Question: At the .05 level of significance, does there appear to be a significant statistical
relationship between the two variables?
Question: Does the relationship between no. of students and average quarterly sale for these
data seem reasonable to you? Explain.
Problem 63. The following data give the percentage of women working in five companies in
the retail and trade industry. The percentage of management jobs held by women in each
company is also shown.

a. Develop the estimated regression equation by computing the values of b0 and b1 using MS
Excel.
b. Predict the percentage of management jobs held by women in a company that has 60%
women employees.
c. Comment on Correlation coefficient and Coefficient of Determination values.

Correlation coefficient (Multiple R)

The correlation coefficient is a statistical measure of the strength of a linear relationship
between two variables. Its values can range from -1 to 1.
Coefficient of Determination(R Square)
 R 2is a measure of the goodness of fit of a model.
 The coefficient of determination is the square of the correlation(r); thus, it ranges from 0 to
1.
 With linear regression, the coefficient of determination is equal to the square of the
correlation between the x and y variables.
 If R2 is equal to 0, then the dependent variable cannot be predicted from the independent
variable.
 If R2 is equal to 1, then the dependent variable can be predicted from the independent
variable without any error.
 If R2 is between 0 and 1, then it indicates the extent that the dependent variable can be
predictable.
 It is proportion of the variance in the dependent variable that is predicted from the
independent variable.
 It indicates the level of variation in the given data set.

Interpretation of p values: Relationship between the variables be statistically significant if p

≤ α.
Interpretation of F values: The relationship between the independent variables (𝑥) and the
dependent variable ( 𝑦 ), represented by the regression equation for the given data, appears
reasonable if 𝐹 ≥ Significance F

Problem 64. Regression Analysis has been performed using MS Excel (shown below) to study the
relationship between laptop price ($) and its score. Answer the following questions on the basis of
Regression Analysis performed:

1. Formulate the straight-line equation that is best fit for data.

2. Find the laptop’s score, if price is $650, and if price is $1250.
3. Define coefficient of determination and correlation coefficient, and interpret the values
of Multiple R and R Square.
4. At the 0.05 level of significance, does there appear to be a significant statistical
relationship between the variables?
5. Question: Does the relationship between independent variables and dependent variable
for these data seem reasonable to you? Explain.
 Session 24
Multiple Linear Regression
Problem 65. As an illustration of multiple regression analysis, we will consider a problem
faced by the butler Trucking Company, an independent trucking company in southern
California. A major portion of butler’s business involves deliveries throughout its local area.
To develop better work schedules, the managers want to predict the total daily travel time for
their drivers.

Question: At the .05 level of significance, does there appear to be a significant statistical
relationship between the variables?

Q ue sti on:Does the relationship between independent variables and dependent variable for
these data seem reasonable to you? Explain.

Problem 66. The owner of Showtime Movie Theaters, Inc., would like to predict weekly
gross revenue as a function of advertising expenditures. historical data for a sample of eight
weeks follow.

a. Develop an estimated regression equation with the amount of television advertising as the
independent variable.
b. Develop an estimated regression equation with both television advertising and newspaper
advertising as the independent variables.
c. Is the estimated regression equation coefficient for television advertising expenditures the
same in part (a) and in part (b)? Interpret the coefficient in each case.
d. Predict weekly gross revenue for a week when $3500 is spent on television advertising and
$1800 is spent on newspaper advertising.
Correlation Analysis (Measures of Association Between Two Variables)
Correlation analysis is a statistical method used in research to measure the strength of the linear
relationship between two variables and compute their association.
Karl Pearson Correlation Coefficient: It measures the strength of the linear correlation
between two variables.

Problem 67. A department of transportation’s study on driving speed and miles per gallon for
midsize automobiles resulted in the following data:
Speed (Miles per Hour) 30 50 40 55 30 25 60 25 50 55
Miles per Gallon 28 25 25 23 30 32 21 35 26 25
Compute and interpret the sample correlation coefficient.
Problem 68. The following table shows data of Density (per sq. km) and Patients of dengue
fever. Compute the Karl Pearson correlation coefficient.

Density (per sq. km) 2000 5000 4000 7000 6000 3000

Patients of dengue fever 100 160 140 200 170 130

Problem 69. The following table shows data of price and supply. Compute the Karl Pearson
correlation coefficient.
Price (✕1000) 10 20 30 40 50 60 70

Supply 8 6 14 16 10 20 24