ESTIMATION & HYPOTHESIS TESTING

1. A telephone company wants to estimate the average length of long-distance calls during weekends. A random sample of 50 calls gives a mean x = 14.5 minutes and standard deviation s = 5.6 minutes. Give a 95% confidence interval and a 90% confidence interval for the average length of a long-distance phone call during weekends. 2. British Petroleum has recently been investing in oil fields in the former Soviet Union. Before deciding whether to buy an oilfield, the company wants to estimate the number of barrels of oil that the oilfield can supply. For a given well, the company is interested in a purchase if it can determine that the well will produce, on average, at least 1,500 barrels a day. A random sample of 30 days gives a sample mean of 1,482 and the population standard deviation is 430. Construct a 95% confidence interval. What should be the companys decision? 3. The management of a supermarket needs to make estimates of the average daily demand for milk. The following data are available (number of half-gallon containers sold per day): 48, 59, 45, 62, 50, 68, 57, 80, 65, 58, 79, 69. Assuming that this is a random sample of daily demand: a. Give 90% confidence interval for average daily demand for milk. b. Give 95% confidence interval for average daily demand for milk of population and compare to 90% confident interval in part a. c. Explain the meaning of confidence interval and interpret the difference between 90% confidence interval and 95% confidence interval. 4. The engine of the Yamaha model YA70 P-3 is qualified to provide 246 horsepower. To determine whether the power is 246 HP or not, a quality control engineer at the workshop runs the engine n = 60 times, randomly chosen, and gets a sample mean of 239 horsepower and standard deviation of 20 horsepower. Conduct the test, using = 0.01 and state your conclusion. 5. A tire manufacturer wants to estimate the average number of miles that may be driven on a tire of a certain type before the tire wears out. A random sample of 32 tires is chosen; the tires are driven on until they wear out, and the number of miles driven on each tire is recorded. The data, in thousands of miles, are as follows: 32, 33, 28, 37, 29, 30, 25, 27, 39, 40, 26, 26, 27, 30, 25, 30, 31, 29, 24, 36, 25, 37, 37, 20, 22, 35, 23, 28, 30, 36, 40, 41 Give a 99% confidence interval for the average number of miles that may be driven on a tire of this kind. 6. A machine produces safety devices for use in helicopters. A quality-control engineer regularly checks samples of the devices produced by the machine, and if too many of the devices are defective, the production process is stopped and the machine is readjusted. If a random sample of 52 devices yields 8 defectives, give a 98% confidence interval for the proportion of defective devices made by this machine.

7. A company believes its market share is about 14%. Find the minimum required sample size for estimating the actual market share to within 5% with 90% confidence. 8. Find the minimum required sample size for estimating the average number of designer shirts sold per day to within 10 units with 90% confidence if the standard deviation of the number of shirts sold per day is about 50. 9. A certain kind of packaged food bears the following statement on the package: Average net weight 360 gr. Suppose that a consumer group has been receiving complaints from users of the product who believe that they are getting smaller quantities than the manufacturer states on the package. Therefore the consumer group wants to test the hypothesis that the average net weight of the product in question is 360 gr versus the alternative hypothesis that the package are, on average, underfilled. A random sample of 144 packages of the food product is collected, and it is found that the average net weight in the sample is 354 gr and that the sample standard deviation is 180 gr. Given these findings, is there evidence that the manufacturer is underfilling the package? 10. The Convoy Truck Company has been faced with steadily increasing fuel, labor, repair, and equipment costs. Although the company has raised rates as much as possible to reflect increased costs, competition among trucking companies has dramatically increased. Four years ago Convoy completed an extensive study of the costs and revenues associated with its operations. The average profit per truckload shipment was found to be $158.12. Convoy does not want to go through such an extensive study again because of the costs involved and does not think it needs to because it has not altered operations. Rather than undertake a complete audit of all shipments, the managers decide to select a random sample of invoices, determine the average profitability of this sample, and see if the per-run profitability has changed. The results of this sample are as follows: Sample size = 800 invoices Average sample profit = $149.76 Sample standard deviation = $189.90 a. Formulate the null hypothesis and decision rule for Convoy if the company wants to limit the chance of making a Type I error to 4%. b. Based on your decision rule and the sample data, what conclusions should the Convoy Truck Company reach? 11. The manager at a major U.S. airport wishes to estimate the proportion of flights that arrived late at the airport last year for a report she must submit to the Civil Aeronautics Board. She has indicated that a 95% confidence interval is required with a margin of error of 0.02. a. How large a sample should the airport manager select? , is 0.24. b. Using the sample size determined in part a, suppose the sample proportion, p Develop the confidence interval and provide the appropriate interpretation for the airport manager.

12. Average total daily sales at a small food store are known to be $452.80. The stores management recently implemented some changes in displays of goods, order within aisles, and other changes, and it now wants to know whether average sales volume has changed. A random sample of 12 days shows = $501.90 and S = $65.00. Using = 0.05, is the sampling result significant? Explain. 13. Many recent changes have affected the real estate market.4 A study was undertaken to determine customer satisfaction from real estate deals. Suppose that before the changes, the average customer satisfaction rating, on a scale of 0 to 100, was 77. A survey questionnaire was sent to a random sample of 50 residents who bought new plots after the changes in the market were instituted, and the average satisfaction rating for this sample was found to be _ 84; the sample standard deviation was found to be S = 28. Use an of your choice, and determine whether statistical evidence indicates a change in customer satisfaction. If you determine that a change did occur, state whether you believe customer satisfaction has improved or deteriorated. 14. The owner of a workshop manufacturing cereal wants to test the performance of his filling machine. The machine is designed to a mean amount of = 360 gr per box, and the owner wants to detect any departure from this setting. The quality control experiment calls for sampling 100 boxes to determine whether the machine is performing to specifications. The mean of the sample is 355.5 gr, the sample standard deviation is 15 gr. a. Conduct the test of hypothesis for this quality control experiment, using = 0.01 b. Find the observed significance level (p-value) of the test, whether the machine is performing to the specification if = 0.01. c. Construct a 99% confidence interval for the mean amount filled per box. What conclusion do you have about the performance of the machine? d. Compare the conclusions from part a., b., and c. 15. A producer of frozen orange juice claims that 20% of all orange juice drinkers prefer its product. To test the validity of this claim, a competitor samples 200 orange juice drinkers and finds that only 33 prefer the producers brand. Does the sample evidence indicate that the proportion of orange juice drinkers who prefer the producers brand is significantly less than 20%? Test at = 0.10. 16. Suppose that the Goodyear Tire Company has historically held 42% of the market for automobile tires in the United States. Recent changes in company operations, especially its deversification to other areas of business, as well as changes in competing firms operations, prompt the firm to test the validity of the assumption that it still control 42% of the market. A random sample of 550 automibiles on the road shows that 219 of them have Goodyear tires. Conduct the the test at = 0.01. 17. An automobile manufacturer substitutes a different engine in cars that were known to have an average miles-per-gallon rating of 31.5 on the highway. The manufacturer wants to test whether the new engine changes the miles-per-gallon rating of the automobile model. A random sample of 100 trial runs gives = 29.8 miles per gallon and S = 6.6 miles per gallon. Using the 0.05 level of significance, is the average miles-per-gallon rating on the highway for cars using the new engine different from the rating for cars using the old engine?

18. In controlling the quality of a new drug, a dose of medicine is supposed to contain an average of 247 parts per million (ppm) of a certain chemical. If the concentration is higher than 247 ppm, the drug may cause some side effects; and if the concentration is below 247 ppm, the drug may be ineffective. The manufacturer wants to check whether the average concentration in a large shipment is the required 247 ppm or not. A random sample of 60 portions is tested, and the sample mean is found to be 250 ppm and the sample standard deviation 12 ppm. Test the null hypothesis that the average concentration in the entire large shipment is 247 ppm versus the alternative hypothesis that it is not 247 ppm using a level of significance = 0.05. Do the same using = 0.01. What is your conclusion? What is your decision about the shipment? If the shipment were guaranteed to contain an average concentration of 247 ppm, what would your decision be, based on the statistical hypothesis test? Explain. 19. The unemployment rate in Britain during a certain period was believed to have been 11%. At the end of the period in question, the government embarked on a series of projects to reduce unemployment. The government was interested in determining whether the average unemployment rate in the country had decreased as a result of these projects, or whether previously employed people were the ones hired for the project jobs, while the unemployed remained unemployed. A random sample of 3,500 people was chosen, and 421 were found to be unemployed. Do you believe that the government projects reduced the unemployment rate? 20. According to the New York Times, the Martha Stewart Living Omnimedia Company concentrates mostly on food. An analyst wants to disprove a claim that 60% of the companys public statements have been related to food products in favor of a left-tailed alternative. A random sample of 60 public statements revealed that only 21 related to food. Conduct the test and provide a p -value. 21. Efforts are under way to make the U.S. automobile industry more efficient and competitive so that it will be able to survive intense competition from foreign automakers. An industry analyst is quoted as saying, GM is sized for 60% of the market, and they only have 43%. General Motors needs to know its actual market share because such knowledge would help the company make better decisions about trimming down or expanding so that it could become more efficient. A company executive, pushing for expansion rather than for cutting down, is interested in proving that the analysts claim that GMs share of the market is 43% is false and that, in fact, GMs true market share is higher. The executive hires a market research firm to study the problem and carry out the hypothesis test she proposed. The market research agency looks at a random sample of 5,500 cars throughout the country and finds that 2,521 are GM cars. What should be the executives conclusion? How should she present her results to GMs vice president for operations?
Textbook: 9.69 - 9.75, page 385 - 386.