Mahatma Education Society’s

Pillai Institute of Management Studies and Research

MMS (2016-18)
SEMESTER-I Examination December 2016
Date: 19/12/16 Max. Marks: 60
Subject: Business Statistics Time: 3 Hrs.

Instructions:
1) Question No.1 is compulsory carrying 20 marks.
2) Answer any 04 questions from Question No.2 to 7 carrying 10 marks each.
3) All the sub-questions of the main question should be attempted together.

Q1. (a) A sales manager collected the following data on annual sales and years of experience.

Salesperson 1 2 3 4 5 6 7 8 9 10

Years of Exp. 1 3 4 4 6 8 10 10 11 13

Annual Sales 80 97 92 102 103 111 119 123 117 136

(‘000)

- Calculate coefficient of correlation between experience and annual sales.

- Develop a regression equation that can be used to predict annual sales given the years of
experience
- Use the estimated regression equation to predict annual sales for a salesperson with 9
years of experience.

(b) The following figures relate to the number of units sold of four different brands of a
product in five different areas.
Number of Units for Brands
Area
A B C D
1 80 100 95 70
2 82 110 90 75
3 88 105 100 82
4 85 115 105 88
5 75 90 80 65

Is there any significant difference in brand preference? (Test at 5% level of significance)

Q2. Answer any two.

(a) A quality control inspector tested nine samples of each of three designs A, B and C of certain
bearing for a new electrical winch. The following data are the number of hours it took for each
bearing to fail when the winch motor was run continuously at maximum output.
A: 16 16 53 15 31 17 14 30 20
B: 18 27 23 21 22 26 39 17 28
C: 31 16 42 20 18 17 16 15 19

Calculate the mean and median for each group and suggest which design is best and why?

(b) A tire manufacturer wants to set a minimum kilometre guarantee on its new AT 100 tire.
Tests reveal the mean kilometre is 47,900 with a standard deviation of 2050 kms and the
distribution is a normal distribution. The manufacturer wants to set the minimum guaranteed
kilometre so that no more than 4 per cent of the tires will have to be replaced. What minimum
guaranteed kilometre should the manufacturer announce?

(c) Calculate Bowley’s coefficient of skewness from the following data:

Sales (in lakhs) : Below 50 60 70 80 90

No. of companies: 8 20 40 65 80

Q3. Answer any two.

(a) In a certain town, there are equal number of males and females. It is known that 20 percent of
the males and 5 percent of the females are unemployed. A research student studying the
employment situation selects an unemployed person at random. What is the probability that the
person selected is (i) male (ii) female

(b) An investigator collected the following data with respect to the socio-economic status and
severity of respiratory illness.

Patient: 1 2 3 4 5 6 7 8 9 10

Socio-economic 6 5 3 10 2 4 9 7 8 1
Status Rank

Severity of 3 8 4 9 1 6 10 7 5 2
Illness Rank

Calculate the rank correlation coefficient and comment on its value.

(c) A magazine vendor purchases a copy for Rs. 10 and sells at Rs. 30 each. Unsold copies are
complete loss for the vendor. The different demand for magazines along with the probabilities is
given below.
Demand (in’00): 7 8 9 10
Probablity: 0.1 0.2 0.4 0.3

How many copies should the vendor order to maximize its profits? Use EMV criterion. Also
calculate EVPI.

Q4. Answer any two.

(a) The lifetimes of a certain kinds of electronic devices have a mean of 300 hours and standard
deviation of 25 hours. Assuming that the distribution of these lifetimes, which are measured to
the nearest hour, can be approximated closely to a normal curve
- Find the probability that any one of these electronic devices will have a lifetime of more than
350 hours.
- What percentage will have lifetimes of 325 hours or less?
- What percentage will have lifetimes from 240 to 260 hours?

(b) 100 employees randomly selected from a group of 1000 employees enrolled for a training
program were cross-classified by age and their grade points. Accordingly the following data was
compiled.
Grade point Age
Below 25 26-28 Over 28 Total
Upto 3.0 6 9 5 20
3.1 to 3.5 18 14 8 40
3.6 to 4.0 11 12 17 40
35 35 30 100
At 5 % level of significance, test the hypothesis that age and grade points are independent.

(c) The mean height of two groups of 500 and 600 people were 186 and 175 centimetres
respectively. Their corresponding standard deviation was 9 and 10 centimetres. Obtain the mean
and variance of the two groups combined together.

Q5. Answer any two.

(a) Past experience has shown that the breaking strength of a certain type of wire is normally
distributed with standard deviation of 200 kg. A random sample of 64 specimens gave a mean of
6200 kg. Determine a 95 percent confidence interval for the mean breaking strength of the
population to suggest to the quality control supervisor.

(b) Given below are the scores obtained by 50 participants in a computer training program.
Scores 0 - 10 10 - 20 20 - 30 30 - 40 40 - 50
No. of candidates 6 8 20 9 7
If the cut off point was 34, find the percentage of candidates scoring more than 34 marks.
(c) A company has appointed 10 new secretaries out of which 7 are trained. If a particular
executive is to get three secretaries, selected at random, what is the chance that at least one of
them will be untrained?

Q6. Answer any two.

(a) Samples of polythene bags from two manufacturers A and B are tested by a buyer for
bursting pressure, giving the following results:

Bursting pressure Number of bags

A B
5 – 10 2 9
10 – 15 9 11
15 – 20 29 18
20 – 25 54 32
25 – 30 11 27
30 - 35 5 13

Which set of bags have more uniform pressure?

(b) The diameter of shafts produced in a factory conforms to normal distribution. 31 per cent of
the shafts have a diameter less than 45 mm and 8 per cent have more than 64 mm. Find the mean
and standard deviation of the diameter of shafts.

(c) Explain the terms skewness and kurtosis.

Q7. Answer any two.

(a) A management graduate applies for a job in two firms X and Y. He estimates that the
probability of his being selected in firm X is 0.7 and being rejected in Y is 0.5 and the
probability that at least one of his applications is rejected is 0.6. What is the probability that he
will be selected in one of the firms?

(b) A survey was conducted to study the relationship between expenditure (in Rs.) on
accommodation and expenditure on food and entertainment and the following results were
obtained.
Mean Standard deviation
Expenditure on accommodation 173 63.15
Expenditure on food and entertainment 47.8 22.98
Coefficient of correlation is 0.57
Estimate the expenditure on food and entertainment if the expenditure on accommodation is 200.

(c) Explain the general procedure of testing a hypothesis.

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