IMT-24: QUANTITATIVE TECHNIQUES

PART A

Q1. What do you mean by Quantitative Techniques? What are different forms of Quantitative Techniques? Explain the importance of Quantitative Techniques in business. Ans: Quantitative analysis provides a systemic approach to decision

making. Decision-making is an allpervasive feature of management. A systematic approach to decision making is necessary because todays business and the environment is which it functions are for more complex than is past, and the cost of making errors may be too high present day. Management cannot rely solely on a trial and error approach. Thus, the decision makers in the business world today must understand scientific methodology of making decisions. This calls for (1) Defining a problem in a clear manner, (2) Collection pertinent facts, (3) Analyzing the facts thoroughly, (4) Deriving and impel melting the solution. Decision making may involves decision under certainty or uncertainty, under static or dynamo conditions, and against nature of some rational opener the essential idea of the quantitative approach to decision making is that if the factors that is fluency the decisions can be identify and quantity then it becomes easier to resolve the complexity of the decision making situation. A large number of business problems have been given a quantitative representation with varying degree of success and it has led to a general approach which is variably designated as operations research (for operational research), management science, system analysis, decision analysis, decision science etc. Quantitative analysis is now extended to several areas of business operations and represents probably the most effective approach to handling of some types of decision problems. Quantitative analysis acquaints the manager with the application of mathematical and statistical tools for analyzing managerial problem in order to arrive at a decision. Quantitative techniques are used everywhere in business and management, Marketing, Production, finance, accounting and investment, personnel and economics. Two major divisions of quantitative techniques are

(1) (2)
(1)

Mathematical: Statistics:

In mathematical division and its applications we study certain correspondences between two sets of objects. Example of this correspondences are Price of commodity and its demands advertising expenses and sales incomes and expenditure etc. Many of the decision facing managers fall into the category of optimizations problems. E.g. decisions relating to maximizing profit on minimizing clearly involve optimization. Often such problems can be solved graphically or by using algebra. In other cases, however, the solution requires the use of calculus. More importantly, in many cases calculus can be used to solve such problems more easily and with greater insight into the economic principle underlying the solution. To make a decision in any business situation need data facts expressed in quantitative form can be termed add success of any statistical investigation depends on the availability of accurate and reliable data statistical methods are for summarizing and describing numeral methods for submersing and describing numeral data. The objectives of statistical method are to find one value, which represent and can be used to locate and summer the entire set of varying values. This one values can be use top made many decisions concerning the entire set. There are various econometric method that can be used derive estimates of the parameters of economic relationship from statistical observations (Simple liners regression and ordinary classical least squares method come in this) Forecasting & predicting is an essential tool is any decision making process. Its uses vary from determining inventory requirements for a local shoe to estimating the annual sales of video games. The quality forecast management can make is strongly related to information that can be extracted and used from past data time-series analysis is are quantitative method used to determine patterns in data collected every time. Time series analysis is used to direct patterns of charge in statistical information over regular time intervals.

(2)

Q2. What are the different statistical tools used for organizing data. The following frequency distribution represents the number of days during a year that the faculty of the college was absent from work due to illness.
Number of Days Number of Employees 5 10 20 10 5 Total 50

0-2 3-5 6-8 9-11 12-14

(a) Construct a frequency distribution for this data. (b) Construct a greater than cumulative frequency distribution as well as a less than cumulative frequency distribution for this data. (c) How many employees were absent for less than 3 days during the year? (d) How many employees were absent for more than 8 days during the year? (e) Draw the cumulative frequency ogives (greater than and less than) .What is the significance of intersection of these two ogives?
Ans 2: A multitude of different statistical tools is available, some of them simple, some complicated, and often very specific for certain purposes. In analytical work, the most important common operation is the comparison of data, or sets of data, to quantify accuracy (bias) and precision. Fortunately, with a few simple convenient statistical tools most of the information needed in regular laboratory work can be obtained: the "t-test, the "F-test", and regression analysis. Therefore, examples of these will be given in the ensuing pages.
Ans 2a and 2b: Below is the frequency distribution table with less than and greater than cumulative frequency distribution of the above data. (This table answers question Q2.a and Q2.b)

Lower Upper < Number of Number of Days Class Class Cumulative Employees Absent Boundaries Boundaries Frequency 0-2 5 -0.5 2.5 5 3-5 10 2.5 5.5 15 6-8 20 5.5 8.5 35 9-11 10 8.5 11.5 45 12-14 5 11.5 14.5 50
Ans 2 c): There are 5 employees absent for less than 3 days during the year.
Ans 2d): There are 15 employees absent for more than 8 days during the year.

> Cumulative Frequency 50 45 35 15 5

Ans 2e):
Cumulative Frequency Ogives
55 50

45
C u m u la t iv eF r e q u e n c y( N u m b e ro fE m p lo y e e s )

40

35

30

25

<CF

>CF
20

15

10

0 -0.5

2.5

5.5

8.5

11.5

14.5

17.5

Class Bounda ries (Numbe r of Da ys Absent)

The intersection of these two ogives represents the median of the distribution table. The value of the median equals to 7. For the given year, 50% of the total employees were absent for at most 7 days and the other 50% of them were absent for at least 7 days. Q3. What are different uses or functions of statistics? How do you think each function might be used to solve Business problems? Ans: The following are the important uses or functions of statistics:

1. Definiteness: It presents the facts in a precise and definite form. Statements of facts conveyed in numerical terms are more convincing than vague and general statements.
2. Condensation: It condenses mass of data into few significant figures. By simplifying mass of figures it helps in better understanding of data.
3. Comparison: Data is compared for the better understanding. The comparison may be over time or with other similar data.
4. Statistical methods are helpful in formulating and testing of hypothesis and to develop new theories.
5. Prediction: Based on past data and its trend we are able to predict the future. The predictions help in meeting the requirements of the future in a better way.
6. Formulation of policies: By providing the basic material the statistics help in formulation of appropriate policies.
Statistics functions provide solutions to business problems and should include:

calculations using 3 methods of averaging (mean, median, mode) frequency distribution represented graphically (histogram) one standard deviation calculation write a short response on the results of the above calculations
Q4(a) Explain the use of different measures of central tendency in description of data. Suppose you are given output of a factory for 5 years & you are asked to work out the average rate of growth of this output, what measures of central tendency you will use. Ans: Uses of different measures of Central Tendency 1. Mode - The mode is the observed value that occurs most frequently. It is not affected by extreme values and is used with nominal data or any distribution when haste is necessary.

2. Median - The median is the positional middle of the arrayed data. It is affected by the position of each item in the arrayed data but not by the value of each item. Therefore, it is less likely affected by the presence of extreme values. This is used with ordinal data or higher.

3. Mean - The mean is the sum of all values of the observations divided by the number of observations. Unlike the median and mode, it is greatly affected by extreme values. Mean is normally used with interval and ratio data. Now Ive given output of a factory for 5 years and asked to work out the average rate of growth of this output. In that case the mean is the best measure to capture the average rate of growth

Q4(b) Paul the plumber sells five types of drain cleaner each type, along with the profit per can & the no. of cans sold, is shown in the table. Calculate the average profit of plumber
Cleaner Profit per Can (x) Sales value in can Xw (w) 15 Rs 90.0 3 Rs 6.00 7 Rs 24.50 15 Rs 75.00 12 Rs 90.00 52 Rs 285.50

Main Drain Glunk out Bubble up Dream Drain Clear more Total

Rs 6.00 Rs 2.00 Rs 3.50 Rs 5.00 Rs 7.50 Rs 24.00

Ans 4b): I can calculate average profit from above given table

Average Profit =

Xw w 285.50 52

= 5.50 Q5(a) What do measures of dispersion and skewness indicate? Explain the use of standard deviation in Business. Ans 5(a): Measures of dispersion indicate the extent to which individual items in a series are
scattered about an average. A measure of skewness shows the degree of asymmetry, or departure from symmetry of a distribution. It indicates not only the amount of skewness but also direction.

There are many possible uses of standard deviation. One possible use is in manufacturing. Production should conform to the standards set by the company. The greater the standard deviation of a certain product characteristic suggests that the quality of production is undermined, thus need to be assessed or evaluated. Q5(b): Do you think Absolute measure of standard deviation is always useful in business? If not, explain the use of alternate measures of Dispersion. Ans: NO. In market research surveys, most of the research questions are normally in Likert scale. If this is the case, median is normally used to capture the central tendency of the data. Standard deviation is not a good measure of dispersion then. One should opt for using Interquartile range. This is one method of removing the influence of extreme values on the range. The interquartile range is calculate dby arranging the data in numerical order, removing the upper and lower one quarter of the values , and then noting the range of remaining values.

Other measure of dispersion is the range, the difference between the largest and smallest values, but this is least reliable and is used only when one is a hurry to get the measure of variability. Q5 (c): Two workers on the same job shown the following results over a long period of time.

A B Mean time of completing the job (in minutes) 40 30 S.D. (in minutes) 8 5 (i) Which worker appears to be more consistent in the time he requires to complete the job? (ii) Which worker appears to be faster in completing the job? Ans 5c (i):
Worker B appears to be more consistent in the time he requires to complete the job as there is less deviation from the mean time compared to Worker A. Ans 5c (ii):
Worker B appears to be faster in completing the job as there is less mean time of completing the job compared to Worker A.

PART B Q1. A recent court case in Madison Country, Kentucky, centered on the hiring practices of the local telephone company. The company planned to hire 3 new employees. There were 8 applicants for the jobs, 6 of whom were men. All 3 of those hired were men. A charge of sex discrimination was levied against the company. How would you decide? Ans: I would say, the company is not guilty. Only 1 out of 3 applicants is a female. Thus the probability of hiring all men is 36%,

6 5 4 x x = 0.36 , as compared to the probability of 8 7 6

6 5 2 6 2 1 x x + x x = 0.21 . 8 7 6 8 7 6

hiring at least one female which is only 21%,

Q2. Only 60 percent of the students in Professor Harmonds statistics class pass the first test. Of those who pass, 80 percent studied; 20 percent of those who didnt pass studied. Should you study for his tests? Ans: Let total number of students be = T

Total number of students who studied = (80% of the 60% who passed + 20% of the 40% who failed)

= 0.8 * 0.6 * T + 0.2 * 0.4 * T

Total number of students who studied & passed = 80% of the 60% who passed = 0.8 * 0.6 * T Probability of pass if you study P (Pass/Study): Number of students who studied & Passed/ Total number of students who studied = 0.8 * 0.6 * T/0.8 * 0.6 * T + 0.2 * 0.4 * T

= (0.048 T) / (0.048 T + 0.08 T) = 85.7%

As the probability of passing in case you study is 85.7%, we should study for the tests
Q3. The probability that John can solve a particular statistics problem is 40 percent. There is a 70 percent chance that Fred can solve it. What is the probability it is solved? Assume that John and Fred work separately and the outcomes are therefore independent. Ans:

Method 1
Probability of John solving the problem (P (JS))= 0.4

Probability of John not solving the problem (P (JNS))= 0.6 Probability of Fred solving the problem (P (FS)) = 0.7 Probability of Fred not solving the problem (P (FNS)) = 0.3 The problem is solved in the following cases If John alone solves the problem = (P (JS)) * (P (FNS)) = 0.4 * 0.3 If Fred alone solves the problem = (P (FS)) * (P (JNS)) = 0.7 * 0.6 If both John & Fred solve the problem = (P (JS)) * (P (FS)) = 0.4 * 0.7 Probability of the problem getting solved = (P (JS)) * (P (FNS)) + (P (FS)) * (P (JNS)) + (P (JS)) * (P (FS)) =0.4 * 0.3 + 0.7 * 0.6 + 0.4 * 0.7 = 0.82 or 82%

Method 2
The probability of both John & Fred not solving the problem = (P (JNS)) * (P (FNS)) = 0.6 * 0.3 = 0.18 Probability of the problem getting solved = 1 Probability of problem not getting solved = 1- 0.18 = 0.82 or 82%

Q4. What do you mean by a. Expected Value and b. Variance of a discrete random variable? c. The number of houses sold each month by Ponder Real Estate, which has varied from 5 to 20, is reported, along with the frequency of each sales level, in the first two columns of the table shown below.
Number of Months 3 7 4 5 3 2

Houses (Xi) 5 8 10 12 17 20

P (Xi) 3 / 24 = 0.125 7 / 24 = 0.292 4 / 24 = 0.167 5 / 24 = 0.208 3 / 24 = 0.125 2 / 24 = 0.083

Mr. Ponder hopes these numbers reflect an increase in the average number of sales over the 7.3 he sold in earlier months and a reduction in the variability of monthly sales that had been = 5.7. If not, he has decided to sell the business and become a rodeo clown. What advice can you offer Mr. Ponder? Answer 4 a):

The expected value of a random variable X is the sum of all possible values of X where each value is multiplied by its probability of occurrence. For discrete random variable, it is given by
n

E ( x) =

x p( x )
i 1 i i

Answer 4 b): The variance of a random variable X with expected value

is

given

by

V ( X ) = E( X ) 2 = E( X 2 ) 2
Answer 4c): The current average number of sales is 10.9 or approximately 11 households. Thus there is still an increase in the average number of sales compared to earlier months. However, there is also an increase in the variability of sales which has value of =9.19. Mr Ponder can still continue his real estate business but would expect that the sales would be unstable. To help maintain sales, he would need to check those months with lower sales and make strategies to increase his sales. . Q5. A state commission has been formed to reduce response times of local fire departments. A group of experts is attempting to identify those city fire departments whose response time is either in the lowest 10 percent, or who take longer than 90 percent of all fire departments in the study. Those in the first group are to serve as models for the less efficient fire units in the second group. Data show that the mean response times for a certain class of fire departments is 12.8 minutes, with a standard deviation of 3.7 minutes. Ans 5: From the empirical rule, 68% all data fall within 1 standard deviation and 95% of all data fall within 2 standard deviation. Given the information, 2 standard deviation will be used for it is nearer to 90%. Therefore lowest 10% approximately have 9.1 minutes response time and for those who take longer than 90% have approximately 16.5 minutes response time.

PART C
Q1. Define Regression Analysis. (a) Explain its use in Business. (b) Distinguish between (i) Simple regression & multiple regression. (ii) Deterministic and Probabilistic model. Ans 1: Regression Analysis is a statistical methodology that utilizes the relationship between two or more quantitative variables so that a response or outcome variable can be predicted from the other.
Ans 1a): One possible use of regression analysis in Business is predicting the sales of a
product using advertising expenditure as the predictor variable. Or, in a more sophisticated way, once a regression model is determined, management can have target sales and would determine how much they are going to spend in advertising using the regression model. Ans 1b (i):
Simple regression is a basic regression model where there is only one predictor variable and the regression function is linear whereas multiple regression has two or more predictor variable. Ans 1b (ii):
A deterministic model is one in which every set of variable states is uniquely determined by parameters in the model and by sets of previous states of these variables. Therefore, deterministic models perform the same way for a given set of initial conditions. Probabilistic model, however, estimates, on the basis of past (historical) data, the probability of an event occurring again. Q 1c): As a furniture retailer in a certain locality, you are interested in finding the relationship that might exist between the number of building permits issued in that locality in past years and the volume of your sales in those years. You accordingly collected the data for your sales (Y, in thousands of rupees) and the number of building permits issued (X, in hundreds) in the past 10 years. The result worked out as: n = 10, X = 200, Y = 2200 X2 = 4600, XY = 45800, Y2 = 490400 Answer the following: (i) Calculate the coefficients of the regression equation.

(ii) It is expected that there will be approximately 2000 building permits to be issued next year. On this basis, what level of sales can you expect next year? (iii) On the basis of the relationship you found in (i) one would expect what change in sales with an increase of 100 building permits? (iv) State your estimate of (ii) in the (iii) so that the level of confidence you place in it is 0.90. Q 1c) (i) : Calculate the coefficients of the regression equation. Ans 1c) (i) :

b1 = bo =

10(45800) (200 * 2200) =3 10(4600) (200) 2

2200 200 (3) = 160 10 10

Q 1c) (ii): It is expected that there will be approximately 2000 building permits to be issued next year. On this basis, what level of sales can you expect next year? Ans 1c) (ii):

levelofsales = 160 + 3(2000) = 6160 Thousand rupees

Q 1c) (iii): On the basis of the relationship you found in (i) one would expect what change in sales with an increase of 100 building permits? Ans 1c) (iii): An increase of 100 building permits would increase sales by 300 thousand rupees
Q 1c) (iv): State your estimate of (ii) in the (iii) so that the level of confidence you place in it is 0.90. Ans 1c) (iv): With level of confidence 0.90, the average level of sales is about 6160 thousand rupees
given there are 2000 building permits to be issued.

Q2. Explain the concept of standard error of estimate and the co-efficient of determination. How can the coefficient of determination be used as a goodness of fit? If the value of the co-efficient of correlation is 0.9 does this indicate that 90% of the variation in dependent variable has been explained by variation in the independent variable? If not, give reasons. Ans 2:
The standard error of the estimate, then, is the standard deviation of the errors of prediction and provides an indication of their variability about the regression line in the population in which predictions are being made.

The co-efficient of determination is the proportionate reduction of total variation associated with the use of the predictor variable X. The coefficient of determination assesses how well a model explains and predicts future outcomes. It is indicative of the level of explained variability in the model. The coefficient, also commonly known as R-square, is used as a guideline to measure the accuracy of the model.

If the value of the co-efficient of correlation is 0.9 does this indicate that 90% of the variation in dependent variable has been explained by variation in the independent variable? If not, give reasons. No. Coefficient of correlation only determines the linear relationship of x and y. It does not measure causality. Q3(a) What do you mean by Time series? What are different components of a Time series? Explain the object of smoothing and the techniques used for smoothing. Ans 3a): A time series is an ordered sequence of observations. Although the ordering is usually through time, particularly in terms of some equally spaced time intervals, the ordering may also be taken through other dimensions, such as space. Different components of a Time series Trend components: - refers to the upward or downward movement that characterizes a time series over a period of time

Seasonal Component: -are periodic patterns in a time series that complete themselves within a calendar year and are repeated on yearly basis

Cycle Pattern: - represent some dynamics, some persistence, some ways in which the present is linked to the past and the future to the present

Irregular Component: - represents unforeseeable movements related to events of all kinds. The object of smoothing and the techniques used for smoothing Smoothing techniques are used to reduce irregularities (random fluctuations) in time series data. They provide a clearer view of the true underlying behaviour of the series. In some time series, seasonal variation is so strong it obscures any trends or cycles which are very important for the understanding of the process being observed. Smoothing can remove seasonality and makes long term fluctuations in the series stand out more clearly. The most common type of smoothing technique is moving average smoothing although others do exist. Since the type of seasonality will vary from series to series, so must the type of smoothing. Exponential smoothing is a smoothing technique used to reduce irregularities (random fluctuations) in time series data, thus providing a clearer view of the true underlying behaviour of the series. It also provides an effective means of predicting future values of the time series (forecasting). A moving average is a form of average which has been adjusted to allow for seasonal or cyclical components of a time series. Moving average smoothing is a smoothing technique used to make the long term trends of a time series clearer. When a variable, like the number of unemployed, or the cost of strawberries, is graphed against time, there are likely to be considerable seasonal or cyclical components in the variation. These may make it difficult to see the underlying trend. These components can be eliminated by taking a suitable moving average. By reducing random fluctuations, moving average smoothing makes long term trends clearer.

Running medians smoothing is a smoothing technique analogous to that used for moving averages. The purpose of the technique is the same, to make a trend clearer by reducing the effects of other fluctuations. Q3(b) Shown here are shipments (in millions of dollars) for electric lighting and wiring equipment over a 12- month period. Use these data to compute (i) 4-month moving average for all available months. (ii) Give the error of forecast.
Months Shipments 1,056 1,345 1,381 1,191 1,259 1,361 1,110 1,334 1,416 1,282 1,341 1,382

January February March April May June July August September October November December

Ans 3b:)
4month MA

Months January February March April May June July August September October November December

Shipments 1,056 1,345 1,381 1,191 1,259 1,361 1,110 1,334 1,416 1,282 1,341 1,382

%error

1243.25 1294 1298 1230.25 1266 1305.25 1285.5 1343.25 1355.25

4.39 2.78 4.63 10.83 5.10 7.82 0.27 0.17 1.94

4(a) Distinguish between (i) Population and Sample (ii) Parameter and Statistic

(b) Why is sampling necessary in statistical investigation? Explain the important methods of sampling commonly used. Q5 (i): What are the steps to a hypothesis test? Ans: Steps to a hypothesis test: Step 1: State the research question Step 2: Specify the null and alternative hypothesis Step 3: Calculate the test statistic Step 4: Compute probability of test statistic or rejection region Step 5: State the conclusion Q 5(ii): Distinguish between a type I error and type II error. Ans 5(ii): A type I error is the rejection of Ho when Ho is true. A type II error is the acceptance of Ho when Ha is true. Q5 (iii): The labor agreement between the United Auto Workers (UAW) and Ford Motor Company (FMC) required that the mean output for a particular production section be held at 112 units per month per employee. Disagreement arose between UAW and FMC as to whether this standard was being maintained. The labor agreement specified that if mean production levels dropped below the stipulated amount of = 112, FMC was permitted to take remedial action. Due to the cost involve, only 20 workers were tested, yielding a mean of 102 units. Assume that a standard deviation of 8.5 units was found and that output levels are normally distributed. Does a 90 percent confidence interval tend to suggest a violation of the labor contract, thereby allowing the remedial action? Ans 5 (iii): 1. State the research question: Does a 90 percent confidence interval tend to suggest a violation of the labor contract, thereby allowing the remedial action?

2. Specify the null and alternative hypothesis Ho: = 112 Ha: < 112

= 0.10
3. Calculate the test statistic zscore =

102 112 = 5.26 8 .5 20

4. Compute probability of test statistic or rejection region

P(z < -5.26)=0.00000007

5. State the conclusion Since p-value is less than = 0.10 , then we can say the mean production level dropped below the stipulated amount of = 112, thus remedial action is allowed.

CASE STUDY I Suppose the director of the Delhi Govt Sanitation Department is interested in the relationship between the age of a garbage truck and the annual repair expense she should expect to incur. In order to determine this relationship, the director has accumulated information concerning four of the trucks the city currently owns (Table 1).

Table 1
Annual Truck-Repair Expenses

Truck Number
101
102
103
104

Age of Truck in Years (X)

5
3
3
1

Repair Expense During Last Year in Hundreds of $ (Y)

7
7
6
4

Questions: With the information in Table 1 (a) Find the numerical constants a and b for the regression line. (b) Determine the equation of the regression line and describe the relationship between the age of a truck & its annual repair expense with the help of Regression Line? (c) What would be the annual repair expense for the truck that is 4 years old? (d) Compute the residuals to test whether this line is a good fit.

Solution:
With the information in Table 1

(a) Find the numerical constants a and b for the regression line?

Trucks 101 102 103 104 Total

Mean of X = 12/4 =3 Mean of Y = 24/4 =6

Expense in hundreds $ Age(X) (Y) XY X^2 5 7 35 25 3 7 21 9 3 6 18 9 1 4 4 1 12 24 78 44

Linear regression equation will be of the form: Y = a + b X b = [sum of (x*y) (n * mean of x * mean of y)]/[Sum of (x^2) (n *mean of x^2)] = [(78)-(4*3*6)]/[(44-(4*3^2))] = 0.75 a = y b x = 6 (0.75 * 3) = 3.75

(b) Determine the equation of the regression line and describe the relationship between the age of a truck & its annual repair expense with the help of Regression Line?
Equation: Y = a + b X Equation y = 3.75 + 0.75 x As age of the truck increases by 1 unit the expenses increase by 0.75 units, i.e if the truck ages by one year the expenses increase by 0.75 * 100 $ = 75$ A truck of 3 yrs age will have an annual repair expense of 3.75 + (0.75*3) = 6 hundred $ =6 * 100 = 600$

(c) What would be the annual repair expense for the truck that is 4 years old?
Using y = 3.75 + 0.75 x X= 4 yrs Annual repair expense y = 3.75 + (0.75*4) = 6.75 i.e 6.75 * 100 = 675$

d) Compute the residuals to test whether this line is a good fit?

Value of Y Expense in using Y = Y actual hundreds $ 3.75 + (0.75 - Y (Y actual - Y (Y actual - Y Age(X) (Y) X) predicted predicted)^2 mean)^2 7 7.5 -0.5 0.25 1 5 3 7 6 1 1 49 3 6 6 0 0 36 1 4 4.5 -0.5 0.25 16 Total 24 24 0 1.5 102 Y mean 6
Coefficient of determination r^2: r^2 = 1 [(Sum of (Y actual Y predicted)^2)/( Sum of (Y actual Y mean)^2)] = 1 [1.5/102] = 1- 0.0147 = 0.985

Conclusion: A coefficient of determination of 0.985 indicates that 98.5 % of the variations in Y (Expense) are explained by X(Age), hence it is a good fit.

CASE STUDY II You collected data from 500 economists in academe, private industry, and government concerning their opinions on whether the economy would prove stable, would expand, or would enter a period of contraction in the near future. However, part of the information was lost, resulting in the partial contingency table seen below. Based on the remaining data, create a probability table.
Economy

Economists Stable Academe 125 Private Industry Government 25 Total 200 Questions: a. Find P(S /A), P(G), P(A), P(AE) Solution: With Missing Values
Economists Academe Private Industry Government Total
Probability Table
Economists Academe Private Industry Government Total

Expansion 35 40

Contraction 100

Total 110 65

Economy Stable Expansion Contraction Total 125 100 100 325 50 25 200 35 40 175 25 0 125 110 65 500

Economy Stable Expansion Contraction Total 0.25 0.2 0.2 0.65

0.1 0.05 0.4

0.07 0.08 0.35

0.05 0 0.25

0.22 0.13 1

Find P(S /A)=

0.25 = 0.38 0.65

P(G)=0.13 P(A)=0.65 P(AE)=0.2