Homework Assignment-5 POM 500 Statistical Analysis Note: Attempt all questions as per

rubric. Problems including case study has a weightage of 10 marks each. The maximum you can
score is 50. Use Excel function wherever possible.

Problem-1

Problem-2 The mean annual cost of automobile insurance is $939. Assume that the standard
deviation is $245. a) What is the probability that a simple random sample of automobile
insurance policies will have a sample mean within $25 of the population mean for each of the
following sample sizes: 30, 50, 100, and 400? (Write Excel function)

Ans. a) Point Estimate for the Average Age

To determine the point estimate for the average age of all employees, you would use the
AVERAGE function in Excel.
Here's how you would do it:
1. Enter the ages of the employees in a column (let's say column A).
2. In an empty cell, type =AVERAGE(A1:A8) and press Enter.
This will give you the average age of the employees, which is the point estimate for the average
age of all employees.
b) Point Estimate for the Standard Deviation

To determine the point estimate for the standard deviation of the population, you would use the
STDEV.P function in Excel.
Here's how you would do it:
1. Enter the ages of the employees in a column (let's say column A).
2. In an empty cell, type =STDEV.P(A1:A8) and press Enter.
This will give you the standard deviation of the ages, which is the point estimate for the standard
deviation of the population.
c) Point Estimate for the Proportion of Female Employees

To determine a point estimate for the proportion of all employees who are female, you would
count the number of female employees and divide by the total number of employees.
Here's how you would do it:
1. Enter the genders of the employees in a column (let's say column B).
2. In an empty cell, type =COUNTIF(B1:B8, "F")/8 and press Enter.
This will give you the proportion of female employees, which is the point estimate for the
proportion of all employees who are female.
b) What is the advantage of larger sample size when attempting to estimate the population
means?

A larger sample size provides a more accurate estimation of the population mean because it
better represents the diversity of the population, leading to a smaller margin of error and a more
precise estimate of the true population average; essentially, the larger the sample, the closer the
sample mean is likely to be to the actual population mean.

Problem-3 Students of a large university spend an average of $5 a day on lunch. The standard
deviation of the expenditure is $3. A simple random sample of 36 students is taken.

(a) According to the Central Limit Theorem (CLT), the sample mean will behave like a normal
distribution when the sample size increases. Also, the expected value and the standard deviation
of the sample mean are 10.50 and 3/8, respectively. (b) Plugging the calculation of
normal distribution, we
have .036.0)8.1(1)64/350.10175.1164/350.10()175.11()21.715(641=Φ−=−>
−=>=>∑=xPxPxPii (c) Similar calculation
gives .0855.09061.09916.0)317.1()392.2()64/350.10994.1064/350.1064/35
0.10397.11()994.10397.11()59.70345.729(641=−=Φ−Φ=−>−>−=>>=>>
∑=xPxPxPii 2. A simple random sample of 8 employees of a corporation
provided the following information. Employee 1 2 3 4 5 6 7 8 Age 25 32
26 40 50 54 22 23 Gender M M M M F M M F (a) Determine the point
estimate for the average age of all employees. (b) What is the point estimate
for the standard deviation of the population? (c) Determine a point estimate
for the proportion of all employees who are female. (a) The sample
average is 34 and it can act as the point estimate of the average age. (b)
The sample standard deviation is 12.57 and it too can act as the point
estimate. (c) Similarly, the sample proportion is used as the point estimate
and the estimate is 1/4 of all employees are female. .

Case Study: Marion Dairies Last year Marion Dairies decided to enter the
yogurt market, and it began cautiously by producing, distributing, and
marketing a single flavor—a blueberry-flavored yogurt that it calls Blugurt.
The company’s initial venture into the yogurt market has been very
successful; sales of Blugurt are higher than expected, and consumers’
ratings of the product have a mean of 80 and a standard deviation of 25 on a
100-point scale for which 100 is the most favorable score and zero is the
least favorable score. Experience has also shown Marion Dairies that a
consumer who rates one of its products with a score greater than 75 on this
scale will consider purchasing the product, and a score of 75 or less indicates
the consumer will not consider purchasing the product. Emboldened by the
success and popularity of its blueberry-flavored yogurt, Marion Dairies
management is now considering the introduction of a second flavor. Marion’s
marketing department is pressing to extend the product line through the
introduction of a strawberry-flavored yogurt that would be called Strawgurt,
but senior managers are concerned about whether or not Strawgurt will
increase Marion’s market share by appealing to potential customers who do
not like Blugurt. That is, the goal in offering the new product is to increase
Marion’s market share rather than cannibalize existing sales of Blugurt. The
marketing department has proposed giving tastes of both Blugurt and
Strawgurt to a simple random sample of 50 customers and asking each of
them to rate the two flavors of yogurt on the 100-point scale. If the mean
score given to Blugurt by this sample of consumers is 75 or less, Marion’s
senior management believes the sample can be used to assess whether
Strawgurt will appeal to potential customers who do not like Blugurt. Prepare
a managerial report that addresses the following issues. a) Calculate the
probability the mean score of Blugurt given by the simple random sample of
Marion Dairies customers will be 75 or less. b) If the Marketing Department
increases the sample size to 150, what is the probability the mean score of
Blugurt given by the simple random sample of Marion Dairies customers will
be 75 or less? c) Explain to Marion Dairies senior management why the
probability that the mean score of Blugurt for a random sample of Marion
Dairies customers will be 75 or less is different for samples of 50 and 150
Marion Dairies customers.

Here, C5 is the Standard Error that occurred based on the given data and is
found by the formula “Standard Deviation/Square root of sample size”
Therefore, the probability the mean score of Blugurt given by the simple
random sample of Marion Dairies customers will be 75 or less is 0.0786 b) If
the Marketing Department increases the sample size to 150, what is the
probability the mean score of Blugurt given by the simple random sample of
Marion Dairies customers will be 75 or less? Ans. Given that the sample size
has been increased to 150, so the Standard error will be changed to 2.041 by
applying the formula mentioned in the table below. So, the probability the
mean score of Blugurt given by the simple random sample of Marion Dairies
customers will be 75 or less can be obtained by using the formula
"=NORM.DIST(75,80,C11,TRUE)", which gives the probability as 0.007152939
~ 0.0071 c) Explain to Marion Dairies senior management why the
probability that the mean score of Blugurt for a random sample of Marion
Dairies customers will be 75 or less is different for samples of 50 and 150
Marion Dairies customers. Ans. Because the standard error of the mean
reduces with sample size, assuming that the population's standard deviation
stays constant, the probability that the mean Blugurt score for a random
sample of Marion Dairies customers will be 75 or less differs for samples of
50 and 150 Marion Dairies customers. This means that a greater number of
samples would increase the likelihood that the Blugurt mean score would be
closer to the population mean of 80. As a result, as the sample size grows,
the probability of getting a mean score of 75 or less reduces. (a) Probability
0.078649604 "=NORM.DIST(75,80,C5,TRUE)" (b) Sample Size 150
Standard Error 2.041241452 "=C3/SQRT(C10)" Probability 0.007152939
"=NORM.DIST(75,80,C11,TRUE