Homework Assignment 7

POM 500 Statistical Analysi

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

According to the Hospital Care cost Institute, the annual expenditure for prescription

drugs is

$838
per person in the Northeast region of the country. A sample of 60

individuals in the Midwest shows

a per person annual expenditure for prescription drugs

of

$745.

Use a population standard deviation of

$300

to answer the following questions.

a)

Formulate hypotheses for a test to determine whether the sample data support the
conclusion that the population annual

expenditure for prescription drugs per person

is lower in the Midwest than in the Northeast.

b)

What is the value of the test statistic?

c)

What is

the p

-
value?

d)

At

= 0.0

1,

what is your conclusion?

Answer:

Formulate hypotheses for a test

The null hypothesis (H0) and the alternative hypothesis (H1) can be formulated as
follows:

● Null Hypothesis (H0): The population mean annual expenditure for prescription
drugs per person in the Midwest is equal to or greater than that in the Northeast.
In mathematical terms, H0: μ >= $838.
● Alternative Hypothesis (H1): The population mean annual expenditure for
prescription drugs per person in the Midwest is less than that in the Northeast. In
mathematical terms, H1: μ < $838.
2. Value of the test statistic

The test statistic can be calculated using the formula for a one-sample z-test:

z = (X̄ - μ) / (σ / √n)

Where:

● X̄ is the sample mean ($745)

● μ is the population mean ($838)
● σ is the population standard deviation ($300)
● n is the sample size (60)

Substituting the given values into the formula, we get:

z = ($745 - $838) / ($300 / √60) ≈ -3.16

So, the value of the test statistic is approximately -3.16.

3. P-value

The p-value is the probability of observing a test statistic as extreme as the one
calculated, assuming the null hypothesis is true. For a z-score of -3.16, the p-value can be
found using a standard normal distribution table or a statistical software. The exact p-
value is less than 0.01.

4. Conclusion at α = 0.01

At a significance level of α = 0.01, if the p-value is less than α, we reject the null
hypothesis. Since our calculated p-value is less than 0.01, we reject the null hypothesis
 and conclude that the data provides sufficient evidence to support the claim that the
population annual expenditure for prescription drugs per person is lower in the Midwest
than in the Northeast.

Like

Problem

The United States ranks ninth in the world in per capita chocolate consumption; Forbes

reports that the average American eats 9.5 pounds of chocola

te annually. Suppose you

are curious whether chocolate consumption is higher in Hershey, Pennsylvania, the

location of the Hershey Company’s corporate headquarters. A sample of 36 individuals

from the Hershey area showed a sample mean annual consumption of

10.05 pounds

and a standard deviation of s= 1.5 pounds. Using

=.05, do the sample results support

the conclusion that mean annual consumption of chocolate is higher in Hershey than it
is throughout the United States?
● The sample data provides sufficient evidence to suggest that the mean annual chocolate
consumption in Hershey is significantly higher than the national average.

Problem

aste. We are interested in determining if more than 21% of the population will like the

new soft drink.

a)

Set up the null and the alternative hypotheses.

b)

Determine the test statistic.

c)

Determine the p

value.

d)
Using α = .05, test to determine if more than 21% o

f the population will like the new

soft drink.

2Null Hypothesis (H0):

p ≤ 0.21 (The proportion of the population who like the new soft drink i
Alternative Hypothesis (H1):
p > 0.21 (The proportion of the population who like the new soft drink is
greater than 21%).

Assumptions:
● A random sample is taken from the population.
● The sample size is large enough to use the normal approximation to the
binomial distribution.

b) Test Statistic:
To calculate the test statistic, we need to first determine the sample proportion
(p̂ ) from a sample of size (n) where a certain number (x) of people liked the
new soft drink:
● Sample proportion (p̂ ): x/n

Z-score (test statistic):

● z = (p̂ - p) / √(p(1-p)/n)
●

c) P-value:
 ● Since the alternative hypothesis is one-tailed (greater than), the p-value
is the area under the standard normal curve to the right of the
calculated z-score.
●

d) Testing at α = 0.05:
● Compare the calculated p-value to the significance level (α = 0.05):
● If p-value < 0.05, reject the null hypothesis.
● If p-value ≥ 0.05, fail to reject the null
hypothesis.

Problem

Consider the following hypothesis test:

H
0

μ≤

38

> 38

You

are
given

the

following

information

obtained

from

random

sample

of

six
observations.

38

40

42

46

42

a)
Using

= 0.05, what is

the rejection

rule?

b)

Determine the standard error of the

mean.

c)

Compute the value of the test statistic. What is your

Conclusion?

1. Calculate the sample mean

○ The sample mean is the sum of the observations divided by the
number of observations.
○
○ x̄ =38+40+42+32+46+426x bar equals the fraction with numerator
38 plus 40 plus 42 plus 32 plus 46 plus 42 and denominator 6

○ 𝑥̄=38+40+42+32+46+426
end-fraction
○

○ x̄ =2406x bar equals 240 over 6 end-fraction

○ 𝑥̄=2406

○
 ○ 𝑥̄=40
○ x̄ =40x bar equals 40

…Calculate the sample standard deviation

○ First calculate the squared differences from the mean:

■ (38−40)2=4open paren 38 minus 40 close paren
squared equals 4
■ (38−40)2=4

■
■ (40−40)2=0open paren 40 minus 40 close paren
squared equals 0
■ (40−40)2=0
■ (42−40)2=4open paren 42 minus 40 close paren
squared equals 4
■ (42−40)2=4
ut
■ (32−40)2=64open paren 32 minus 40 close paren
squared equals 64
■ (32−40)2=64
■ (46−40)2=36open paren 46 minus 40 close paren
squared equals 36
■ (46−40)2=36
■ (42−40)2=4open paren 42 minus 40 close paren
squared equals 4
■ (42−40)2=4
○ Sum the squared differences:
○ 4+0+4+64+36+4=1124 plus 0 plus 4 plus 64 plus 36 plus 4 equals
112
○ 4+0+4+64+36+4=112
○ Divide by

○ n−1=6−1=5n minus 1 equals 6 minus 1 equals 5

○ 𝑛−1=6−1=5
:
○ 1125=22.4112 over 5 end-fraction equals 22.4
○ 1125=22.4

○ Take the square root:

■ s=22.4s equals the square root of 22.4 end-root
■ 𝑠=22.4√
 ■ 𝑠≈4.73
■ s≈4.73s is approximately equal to 4.73

…Determine the rejection rule

○ Since it's a right-tailed test with

○ α=0.05alpha equals 0.05

○ 𝛼=0.05
and
○ 𝑑𝑓=5
○ df=5d f equals 5

, reject
○ H0cap H sub 0
○ 𝐻0
if
○ 𝑡>𝑡0.05,5
○ t>t0.05,5t is greater than t sub 0.05 comma 5 end-sub

.
○

○ t0.05,5=2.015t sub 0.05 comma 5 end-sub equals 2.015

○ 𝑡0.05,5=2.015
○ Reject

○ H0cap H sub 0
○ 𝐻0
if
 ○ 𝑡>2.015
○ t>2.015t is greater than 2.015

.
2. …Calculate the standard error of the mean
○

○ SE=sncap S cap E equals the fraction with numerator s and

denominator the square root of n end-root end-fraction
○ 𝑆𝐸=𝑠𝑛√

○
○ SE=4.736cap S cap E equals the fraction with numerator 4.73 and

○ 𝑆𝐸=4.736√
denominator the square root of 6 end-root end-fraction
○

○ SE≈1.93cap S cap E is approximately equal to 1.93

 ○ 𝑆𝐸≈1.93

3. …Calculate the test statistic

○
○ t=x̄−μ0SEt equals the fraction with numerator x bar
minus mu sub 0 and denominator cap S cap E end-

○ 𝑡=𝑥̄−𝜇0𝑆𝐸
fraction
○

○ t=40−381.93t equals the fraction with numerator 40

minus 38 and denominator 1.93 end-fraction
○ 𝑡=40−381.93

○
 ○ 𝑡≈1.04
○ t≈1.04t is approximately equal to 1.04

4. …Make a conclusion
○ Since

○ 1.041.04
○ 1.04
is not greater than
○ 2.0152.015
○ 2.015
, we fail to reject the null hypothesis.
○ There is not enough evidence to conclude that the population
mean is greater than
○ 3838
 ○ 38
.
● Consider the following hypothesis test: H0:μ≤38Ha:μ>38 You
are given the following information obtained from a random
sample of six observations. Assume the population has a
normal distribution. X384042324642 a. Compute the mean of
the sample. b. Determine the standard deviation of the
sample. c. Determine the standard error of the mean. d.
Compute the value of the test statistic. e. At 95% confidence
using the p-value approach, test the above hypotheses.
Given Information H0:μ≤38H1:μ>38 }] Number of sample size
= 6 Sample observations = 38, 40, 42, 32, 46, 42. a Mean of
the sample i...
Homework.Study.com
● Critical Region and Confidence Interval
For example, the critical values for a 5 % significance test are: For a
one-tailed test, the critical value is 1.645 . So the crit...
Newcastle University
● If the alternate hypothesis states that μ =4000, where is the rejection ...
Feb 24, 2023 — The rejection region for the hypothesis test given that
the alternative hypothesis states μ=4000 is in both tails of ...
Brainly
● H0: μ = 15 Ha: μ≠ 15 The population is approximately normal.
The ...
$H_0: \mu = 15$ $H_a: \mu \neq 15$ The population is
approximately normal. The sample mean is 15.3, the sample
standard deviation ...
numerade.com

Solution

Fail to reject the null hypothesis.

Case Study:

Quality Associates, Inc.

Quality Associates, Inc.

Quality Associates, Inc., a consulting firm, advises its

clients

about sampling and statistical

procedures that can be used to control their manufacturing

processes. In one particular

application, a client gave Quality Associates a sample of 800

observations

taken

during

time

in

which

that

client’s

process
was

operating

satisfactorily. The sample standard deviation for these

data was

.21; hence, with so

much

of the new statistical process control procedure. These data are available in the data set

Quality
.Managerial Report

1. Conduct a hypothesis test for each sample at The 0.01 level of significance and

determine what action, if any, should be taken. Provide the test statistic and p value for

each test.Compute the standard deviation for each of the four samples. Does the assumpti

21 for the population standar ddeviation appear reasonable?

3. Compute limits for the sample mean around such that, as long as a new sample

mean is within those limits, the process will be considered to be operating satisfactorily.If

̄ exceeds the upper limit or if

x

is below the lower limit, corrective action will be taken.

These limits are referred to as upper and lower control limits for quality control purposes.

4. Discuss the implications of changing the level of significance to a larger value. What

mistake or error could increase if the level of significance is increased?

Data set Quality

Sample 1Sample 2
Sampldata,

the

population

standard

deviation

was

assumed

to

be

.21.

Quality
Associates then suggested that random samples of size 30 be taken periodically to

monitor the process on an ongoing basis. By analyzing the new samples, the client could

quickly

learn whether the process was operating satisfactorily. When the process was operating

satisfactorily, corrective action could be taken to eliminate the problem. The

design specification indicated the mean for the process should be 12. The hypothesis test

suggested by Quality Associates follows Corrective action will be taken any time H

is rejected. The following samples were collected at hourly intervals during the first day of o

e 3 Sample 4
11.55 11.62

11.91 12.02

11.62 11.69

11.36 12.02

11.52 11.59

11.75 12.05

11.75

11.82

11.95
12.18 11.90

11.97 12.14

12.11 11.64 11.71

11.72 12.07 11.80 11.87 11.61 12.05 12.03

12.1 11.85 11.64

11.94 12.01 12.16

12.39 11.9211.99

11.91 11.65 12.13

12.20 12.12 12.11 12.09 12.16 11.61 11.90

11.93 12.00 12.21 12.22 12.21

12.28 11.56 11.88

12.32 12.39 11.95 12. 11.93 12.00 12.01 12.35 11.85 11.92 12.06 12.09 11.76 11.83 11.76
12.23 11.82 12.20 11.7 11.812.12 11.79 12.00 12.07 11.60 12.30 12.04

12.11 11.95 12.27 11.98 12.05 11.96 12.29 12.30 12.3 12.22 12.47

12.18 12.25 11.75 12.03 11.97 12.04 11.96 12.17 12.17 12.24 11.95 11.94

11.85 11.92 11.89 11.97 12.30 12.37 11.88 12.23 12.15 12.22 11.93 12.25