SCHOOL OF BUSINESS, ECONOMICS AND MANAGEMENT

ECF 220/ ED 180/ BBA 240/ AFIN 210/ BSP 140/ BIP 160/ BF 260/ BPA 160/ BSM
250- QUANTITATIVE METHODS/ STATISTICS

FINAL EXAMINATION

FRIDAY 1ST JUNE 2012

09:00-12:00 HOURS

Time Allowed: 3 Hours plus 5 minutes reading time

Instructions to Candidates:

1. Check that you have the correct examination paper in front of you.

2. This examination consists of SIX (6) questions. Answer ANY FOUR (4)
questions. All questions carry equal marks.

3. Full credit will be given to clear and logical answers. Write your final
answers to correct three decimal places
4. All questions must be answered in the examination answer booklet only.
5. Write down the number of questions that you have answered on the
cover of the examination answer booklet.
6. Begin each question on a new page.
7. Non-programmable calculators are allowed.

8. No other books, files or mechanical / electronic aids are permitted.

9. There shall be no form communication between students during the

examination. Any students caught doing this will be disqualified.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

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Question One

i) In how many ways can 7 people be seated at a round table if they can sit
anywhere? [3 Marks]
ii) A box contains 15 balls. Balls are selected without replacement one at a time.
In how many different ways can you select 3 balls? [4 Marks]
iii) Suppose that two letters are to be selected from A, B, C, D and E and
arranged in order. How many permutations are possible? [4 Marks]
iv) A personnel officer has eight candidates to fill four similar positions. Five
candidates are men and three are woman. If, in fact, every combination of
candidates are equally likely to be chosen, what is the probability that no
women will be hired? [4 Marks]
v) Out of 5 mathematicians and 7 physicists, a committee consisting of 2
mathematicians and 3 physicists is to be formed. In how many ways can this
be done if any mathematician and any physicist can be included? [ 4 Marks]
vi) Find a) 10C2 b) 8P2. [6 Marks]

TOTAL MARKS: 25

Question Two

1. Given below is a sample of 25 observations,

5 18 29 42 50 61
8 20 33 43 54 63
10 21 35 46 56 67
11 25 39 48 58 69
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calculate:
i) The range [3 Marks]
ii) The arithmetic mean [3 Marks]
iii) The median [3 Marks]
iv) The lower quartile [3 marks]
v) The upper quartile [3 Marks]
vi) The mode [3 Marks]
vii) The mean deviation [3 Marks]
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 viii) The standard deviation [ 4 Marks]

TOTAL MARKS: 25

Question Three

i) A contractor is interested in the total cost of a project on which she intends to

bid. She estimates that materials will cost k25, 000,000 and that her labour
will be k900, 000 per day. If the project takes X days to complete, the total
cost will be 900, 000X kwacha and the total cost of the project will be as
follows;

C= 25,000, 000 + 900,000X

The contractor forms subjective probabilities of likely completion times for the
project.

Completion 10 11 12 13 14
Time X
(days)
Probability 0.1 0.3 0.3 0.2 0.1

a) Find the mean and variance for completion time X. [6 Marks]

b) Find the mean, variance and standard deviation for total cost. [9 Marks]

ii) Suppose the number of typographical errors on a single page of your book
has a Poisson distribution with parameter λ = ½. Calculate the probability that;
a) there is at least one error on this page. [3 Marks]
b) there are two errors on this page. [3 Marks]
c) there are at most four errors on this page. [4 Marks]

TOTAL MARKS: 25

Question Four

i) A machine has 12 identical components which function independently. The

probability that a component will fail is 0.2. The machine will stop working if
more than three components fail. Find the probability that the machine will be
working. [4 Marks]
ii) A company has found from experience that 5 in 100 transactions are
incorrectly processed in a client’s financial records. An auditor randomly
draws a sample of 8 transactions from this client’s accounting records. This
follows a binomial distribution. What is the probability that;
a) No transaction will be incorrectly processed? [3 Marks]
b) At least one transaction will be incorrectly processed? [5 marks]
c) No more than two transactions will be incorrectly processed? [5 Marks]

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 iii) Suppose a real estate agent has five contracts and she believes that for each
contract the probability of making a sale is 0.4.
a) Find the probability that she makes at most one sale. [4 Marks]
b) Find the probability that she makes between two and four sales (inclusive).
[4 Marks]

TOTAL MARKS: 25

Question Five

i) A batch contains 50 good and 20 defective articles. What is the probability

that out of 2 articles chosen at random.
a) Both are good [3 Marks]
b) One is good and one is defective [3 Marks]

ii) A box contains 3 white and 2 black balls. Another box contains 4 white and 5
black balls. A ball is taken at random from the first box and placed in the
second box. A ball is taken out from the second box. What is the probability
that this ball is white? [3 Marks]
iii) Box 1 has 2 white and 3 black balls; Box 2 has 4 white balls and 1 black ball;
Box 3 has 3 white and 4 black balls. A box is selected at random and a ball
drawn at random is found to be white. Find the probability that box 1 was
selected. [3 Marks]

iv) Suppose two fair dice are rolled. Find each of the following probabilities.
a) The first die shows a 2 or the sum is 6. [4 Marks]
b) The two dice show the same number. [4 Marks]

v) The amount of time, in hours, that a computer functions before breaking

down is an exponential random variable with λ = 1/100. (i) What is the
probability that a computer will function between 50 and 150 hours before
breaking down? [5 Marks]

TOTAL MARKS: 25

Question Six
i) In the past, a machine has produced sheets having a thickness of 0.050
inches. To determine whether the machine is in proper working order, a
sample of 10 sheets is chosen for which the mean thickness is 0.053 and the
standard deviation is 0.003. Test the hypothesis that the machine is in proper
working order given by the following hypothesis notation:

H0 :  = 0.05
H1 :   0.05

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 at (a) 95% confidence interval. [4 Marks]
(b) 99% confidence interval? [4 marks]
ii) We are interested in estimating the mean number of unoccupied seats per
flight, μ, for a major airline. A random sample of n = 225 flights shows that the
sample mean is 11.6 and the standard deviation is 4.1. Answer the following
questions;
a) Give a 95% bound on the error of estimation (also known as the margin of
error). [4 marks]
b) Find a 90% confidence interval for μ and interpret the Confidence interval.
What is the width of this Confidence Interval? [4 Marks]

iii) What are the critical values or the z-values for the following confidence
intervals (following a normal distribution); 68%, 95% and 99 %? [9 Marks]

TOTAL MARKS: 25

END OF EXAMINATION PAPER

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FORMULAE
̅
1. Testing of means for small samples: t=

∑ ̅
2. Variance=

3. Var (x) = E(x2 ) - [E(x)]2

⁄
4. Median= ( )

5.

6.

7.

8. Standardising variable for normal distribution:

9. Form of Confidence intervals:

̅
10. Testing of means for large samples:
⁄
√