DECSCI2 K32 LABORATORY EXERCISE 2

For numbers 1 & 2: An MBA student conducted a study on the salaries of MBA
graduates. Using Media lists, she categorized MBA graduates as having attended
either Top 20 schools or second-tier schools.
1. Using GMAT scores, MBA concentration, GPA, undergraduate major and preMBA experience as pairing criteria, she obtained 10 pairs of MBA graduates
from Top 20 schools or second-tier schools. She would like to compare
their first-year earned incomes (thousands of dollars).
Top 20
Second tier

39
63
56
40
45
52
Differences
-1

74
38
18

48
29
4

43
45
36

54
48
42
44
53
35
19
-2
10
-5

50
28
7

22
Is there sufficient evidence at 5% level of significance that the average first-year
earned income of MBA graduates from Top 20 schools significantly higher than
that from second-tier schools? Assume that the differences on the first-year
earned incomes of the two classifications of schools are approximately normally
distributed.
Step 1: Let 1 = average first-year earned income of MBA graduates from Top 20
schools
2 = average first-year earned income of MBA graduates from Secondtier schools
H o = 1 2
H a = 1 2
dependent, Paired t- test, upper tailed
*get differences of the samples and the mean of the diff, can use the t test for one populatiion

Step 2: = 0.05, n1 = 10, n2 = 10

Step 3 and 4:
t Test for Hypothesis of the Mean
Data
Null Hypothesis
=
Level of Significance
Sample Size
Sample Mean
Sample Standard
Deviation

0
0.05
9
12.11111111
12.9368122
5

Intermediate Calculations
4.31227074
Standard Error of the Mean
9
Degrees of Freedom
8
t Test Statistic
2.80852289

1
Upper-Tail Test

Calculations Area
1.85954803
8
0.01144755
6

Upper Critical Value

p-Value

For one-tailed tests:

TDIST value

Reject the null hypothesis

1-TDIST value

0.01144
8
0.98855
2

Step 5: Reject the null hypothesis. At 5% level of significance, there is sufficient

evidence that the average first-year earned income of MBA graduates from Top 20
schools is significantly higher than that from second-tier schools.
2. Next, the MBA student separated the MBA graduates into two groups: those
making a fresh career (under 30 years old) and those making a career
change (over 40 years old). The independent sample data earnings (in
thousand of dollars) were obtained.
Under 30 years old
34, 35, 29, 42, 35, 29, 31, 33, 28

Over 40 years old

50, 39, 36, 36, 45, 65, 45, 40, 52

Is there a significant difference between the average earnings of those making a

fresh MBA career and those who are making an MBA career change? Justify your
answer.
Step 1: Let 1 = true average of earnings of MBA graduates under 30 years old
2 = true average of earnings of MBA graduates over 40 years old
H o : 1 = 2
Ha : 1 2

Independednt variable, separate variance t-test, two tailed

Do f test to check if separate variance or pooled variance t test

F Test for Differences in Two Variances

Data
Level of Significance
Population 1 Sample
Sample Size
Sample Standard Deviation
Population 2 Sample
Sample Size
Sample Standard Deviation
Intermediate Calculations
F Test Statistic
Population 1 Sample Degrees of
Freedom

0.05
10
4.3429
10
9.3274

0.21679
9

Population 2 Sample Degrees of

Freedom

Two-Tail Test
Lower Critical Value
Upper Critical Value
p-Value
Reject the null hypothesis

0.24838
6
4.02599
4
0.03259
7

Calculations Area
0.98370
FDIST value
1
0.01629
1-FDIST value
9

Use separate variance t test because f test is reject null hypothesis

Step 2: = 0.05, n1 = 9 , n2 = 9
Step 3 and 4:
Separate-Variances t Test for the
Between Two Means
(Assumes
unequal
population
variances)
Data
Hypothesized Difference
Level of Significance
Population 1 Sample
Sample Size
Sample Mean
Sample Standard Deviation
Population 2 Sample
Sample Size

Difference

0
0.05
9
32.88888
889
4.3429

Sample Mean
Sample Standard Deviation

9
45.33333
333
9.3274

Intermediate Calculations
Numerator of Degrees of Freedom
Denominator of Degrees of Freedom
Total Degrees of Freedom
Degrees of Freedom
Standard Error
Difference in Sample Means
Separate-Variance t Test Statistic

138.3528
12.2295
11.3130
11
3.4296
-12.4444
-3.6285

Two-Tail Test

Lower Critical Value

Upper Critical Value
p-Value
Reject the null hypothesis

-2.2010
2.2010
0.0040

Step 5: Reject the null hypothesis. At 5% level of significance, there is sufficient

evidence that the average earning of MBA graduates under 30 years old is
significantly different from the average earning of MBA graduates over 40 years old.
3. In a test of the quality of two TV commercials, each commercial was shown in a
separate test area six times over a 1-week period. The following week a telephone
survey was conducted to identify individuals who had seen the commercials. The
individuals who had seen the commercials were asked to state the primary message
in the commercials. The results showed that 350 out of 800 individuals who saw
commercial A recalled the primary message, while 400 out of 850 individuals who
saw commercial B. Is there a significant difference in the recall proportions of the
two populations? Justify your answer.
Step 1: Let p1 = true recall proportion of those who saw commercial A
p2 = true recall proportion of those who saw commercial B
Ho : p1 = p2
Ha : p 1 p 2
z test in two proportions, two tailed
Step 2: = 0.05, p1 = 350 / 800, n2 = 400 / 850
Step 3 and 4:
Z Test for
Proportions

Differences

Data
Hypothesized Difference
Level of Significance
Group 1
Number
of
Items
of
Interest
Sample Size
Group 2
Number
of
Items
of
Interest
Sample Size
Intermediate Calculations
Group 1 Proportion
Group 2 Proportion

in

Two

0
0.05

350
800

400
850

0.4375
0.4705882
35

Difference in Two Proportions

Average Proportion
Z Test Statistic

0.0330882
35
0.4545
-1.3490

Two-Tail Test
Lower Critical Value
-1.9600
Upper Critical Value
1.9600
p-Value
0.1773
Do not reject the null
hypothesis
Step 5: Do not reject the null hypothesis. At 5% level of significance, there is no
sufficient evidence that the recall proportion for those who saw commercial A is
significantly different from the recall proportion of those who saw commercial B.
4. Case Problem: PAR, Inc.
Par, Inc. is a major manufacturer of golf equipment. Management believes that Pars
market share could be increased with the introduction of cut-resistant, longer-lasting
golf ball. Therefore, the research group at Par has been investigating a new golf ball
coating designed to resist cuts and provide a more durable ball. The tests with the
coating have been promising.
One of the researchers voiced concern about the effect of the new coating on
driving distances. Par would like the new cut-resistant ball to offer driving distances
comparable to those of the current-model golf ball. To compare the driving distances
for the two balls, 40 balls of both the new and current models were subjected to
distance tests. The testing was performed with a mechanical hitting machine so that
any difference between the mean distances for the two models could be attributed
to a difference in the two models. The results of the tests, with distances measured
to the nearest yard, follow. See Par.xls.
a. Formulate and present the rationale for a hypothesis test that Par could use
to compare the driving distances of the current and new golf balls.
Step 1:
Let 1 = true average distance of Pars current golf ball model
2 = true average distance of Pars new cut-resistant golf ball model
H o : 1 = 2
Ha : 1 2 z test in two means, two tailed
Step 2:
= 0.05, n1 = 40 , n2 = 40
b. Analyze the data to provide the hypothesis-testing conclusion. What is the pvalue for your test? What is the recommendation for Par Inc?

Z Test
Means

for

Differences

in

Two

Data
Hypothesized Difference
Level of Significance
Population 1 Sample
Sample Size
Sample Mean
Population Standard Deviation
Population 2 Sample
Sample Size
Sample Mean
Population Standard Deviation
Intermediate Calculations
Difference in Sample Means
Standard Error of the Difference in
Means
Z Test Statistic
Upper-Tail Test
Upper Critical Value
p-Value
Do not reject the null hypothesis

0
0.05
40
270.275
8.753
40
267.5
9.8969

2.775
2.0890
1.3284

1.6449
0.0920

Do not reject the null hypothesis. At 5% level of significance, there is no sufficient

evidence that there is a difference between the average distances of the current
and new golf models.
Recommendation for Par Inc: Because the average driving distance of the newcut-resistant ball is comparable to that of the current model golf ball, Par Inc. should
introduce the new-cut resistant, longer-lasting golf ball and use the new coating
designed to resist cuts and provide a more durable ball.
c. Do you see a need for larger sample sizes and more testing with the golf
balls? Discuss.
There is a need for a larger sample size and more testing with golf balls because
although a sample size of 40 seems large enough to generate reliable results, if you
place a higher value for the sample size, say 70, you would arrive with a different
conclusion of Reject the null hypothesis as shown below:
Z Test for Differences in Two
Means

Data
Hypothesized Difference
Level of Significance
Population 1 Sample
Sample Size
Sample Mean
Population
Standard
Deviation
Population 2 Sample
Sample Size
Sample Mean
Population
Standard
Deviation
Intermediate Calculations
Difference in Sample Means
Standard Error of the Difference
in Means
Z Test Statistic
Upper-Tail Test
Upper Critical Value
p-Value
Reject the null hypothesis

0
0.05
70
270.275
8.753
70
267.5
9.8969

2.775
1.5792
1.7573

1.6449
0.0394

If you test with a larger sample size, we find that the test would lead to a rejection
of the null hypothesis, which means that there is a difference between the average
driving distance of the current-model golf ball and the new cut-resistant ball.
Thus, it can be inferred that Par Inc. should do more research before using the new
coating and introducing new-cut resistant, longer-lasting golf balls to the market.