INSTITUTE FOR TECHNOLOGY & MANAGEMENT

  Decision Sciences Max. Marks: 60

End term Exam
Paper – A Max. Time: 2 ½ hrs.
Batch 2018-2020

Note: 1. Question 1 is compulsory. Attempt any 5 questions from Q2 to Q8.

2. Calculators are allowed.
3. All questions carry equal marks (10 marks)
4. Graph paper will be provided.

Q1. A health researcher wants to be able to predict "VO2max" (maximal aerobic capacity), an indicator of
fitness and health. Normally, to perform this procedure requires expensive laboratory equipment and
necessitates that an individual exercise to their maximum (i.e., until they can longer continue exercising due to
physical exhaustion). This can put off those individuals who are not very active/fit and those individuals who
might be at higher risk of ill health (e.g., older unfit subjects). For these reasons, it has been desirable to find a
way of predicting an individual's VO2max based on attributes that can be measured more easily and cheaply. To
this end, a researcher recruited 100 participants to perform a maximum VO2max test, but also recorded their
"age", "weight", "heart rate" and "gender". The researcher's goal is to be able to predict VO2max based on these
four attributes: age, weight, heart rate and gender.The analysis is carried out using SPSS and is as shown below:
 Based on above information answer the following questions
a) List the independent and dependent variables
IV = age, weight, heart rate, gender. DV = VO2max
b) Frame the necessary hypothesis?
H0: VO2max is not significantly dependent on age or weight, or heart rate or gender or all of these.
H1: VO2max is significantly dependent on age or weight, or heart rate or gender or all of these.

c) Comment on strength of model & Se (Standard Error of the Estimate)

i. Adj r square is = 0.559. hence 55.9% ( i: e 60%) of variance in VO2max can be explained with
age , weight, heart rate or gender. Balance 40% may be due to other reasons .
ii. One of the assumptions of regression model is that errors are normally distributed. Hence mean
of erors is 0 . Using empirical rule 65% of errors lie between mean +- 1 sd, 95% of errors lie
between mean +-2sd, and 99% of errors lie between mean +-3 sd.

d) Frame the Equation of regression.

VO2max = 87.830 - .165 age - .385 weight - .118 heart rate + 13.208 gender

e.)Is the hypothesis in (a) accepted or rejected (explain)?

P= 0.000 hence H0 is rejected and H1 is accepted.

Q2. R = 0.98200, R square = 0.9643..

Q3.A. The monthly telephone bill for an individual is normally distributed with an average of Rs. 1500 with a
standard deviation of Rs. 200. Find the following
a) In a randomly chosen month the bill value is more than Rs. 1800
b) In a randomly chosen month the bill value is between Rs. 1100 to Rs. 1800
Solution: µ = 1500, σ = 200
(a) P( X > 1800) = P( Z > 1800-1500/ 200) = P( Z > 1.5) = 0.5 – 0.4332 = 0.0668
(b) P( 1100 < X< 1800) = P( -2< Z < 1.5) = 0.4772 + 0.4332 = 0.9104

Q3.B. An insurance company found that only 0.01% of the population is involved in a certain type of accident
each year. If its 1000 policy holders were randomly selected from the population, then what is the probability
that not more than two of its clients are involved in such an accident next year? (e-0.1 = 0.9048) (5)
Solution: Use Poisson distribution
p = 0.01/100 = 0.0001, n = 1000, m = np = 0.0001x 1000 = 0.1
P(X ≤2 ) = [P(X = 0) + P( X =1) + P( X = 2)]= e-0.1[ (0.1)0 / 0! + (0.1)1 / 1! + (0.1)2 /2 !]
= (0.9048)[1 + 0.1 + 0.005 ] = 0.9998

Q4 (a) Following data gives the distribution of college students according to their hemoglobin level in gm%.
Find out suitable measure of location and dispersion. (5 marks)
Hb level (gm %) No. of students
≤ 10.0 10
10.1-11.0 21
11.1-12.0 67
12.1-13.0 170
13.1-14.0 84
14.1-15.0 29
> 15.0 4
Solution: The class boundaries and cumulative frequencies can be taken as follows:
Class boundaries C.f.
≤ 10.05 10
10.05-11.05 31
11.05-12.05 98
12.05-13.05 268
13.05-14.05 352
14.05-15.05 381
≥ 15.05 385
Since the frequency table has open ends, we cannot calculate mean, standard deviation, mean deviation and
range. Mode and median as measures of central tendency and only quartile deviation can be calculated for
measuring dispersion.
Ans: Mode = 12.63, median= 12.609, Quartile deviation= 0.6365
Marking scheme: Decision about measures of central tendency and variation: 1 mark
Mode: 1 mark, Quartile 1: 1 mark, Quartile 3: 1 mark and Quartile deviation: 1 mark
Total:5 marks
Q4(b) Southeastern Stereos, a wholesaler, was contemplating becoming the supplier to 3 retailers, but inventory
shortages have forced Southeastern to select only one. Southeastern’s credit manager is evaluating the credit
record of these 3 retailers. Over the past 5 years, these retailers’ accounts receivable have been outstanding for
the following average number of days. The credit manager feels that consistency, in addition to lowest average,
is important. Based on relative dispersion, which retailer would make the best customer? (5 marks)
Lee 62.2 61.8 63.4 63.0 61.7
Forrest 62.5 61.9 62.8 63.0 60.7
Davis 62.0 61.9 63.0 63.9 61.5
Ans: Lee: X bar = 62.42 S.D.= 0.7497 COV= S.D/X bar x 100 = 0.7497 x 100/62.42= 1.2%
Forrest: X bar= 62.18 S.D.= 0.9257 COV= S.D/X bar x 100 = 0.9257 x 100/62.18= 1.49%
Davis: X bar= 62.46 S.D.= 0.9762 COV= S.D/X bar x 100 = 0.9762 x 100/62.46= 1.56%
Based on relative dispersion, Lee would be the best customer, but there really isn’t much difference among the
three of them.
Marking scheme: For each person, mean, S.D and COV :1.5 marks Total: 4.5 marks
Final decision: 0.5 marks
Total: 5 marks
Q5. Cost accountants often estimate overhead based on the level of production. At the Standard Kitting
Company, they have collected information on overhead expenses and units produced at different plants, and
want to estimate a regression equation to predict future overhead. (10 marks)
Overhead 191 170 272 155 280 173 234 116 153 178
Units 40 42 53 35 56 39 48 30 37 40
(a) Develop the regression equation for the cost accountants.
(b) Predict overhead when 50 units are produced.
( c) Test the significance of the regression equation at 5% level of significance. Use F tab = 5.32
Ans: (a) X bar = 42, Y bar = 192.2
The simple linear regression equation is Y = a + b X
b = ∑xy/∑x2= 6.4915
a = Y bar – b X bar= 192.2 – (6.4915)(42) = -80.4430
The simple linear regression equation is Y = -80.4430 + 6.4915 X
(b) Y = -80.4430 + 6.4915 (50) = 244.132
Make the ANOVA table and find F cal and compare with Ftab. If F cal < F tab, accept H0 otherwise reject H0.
Marking scheme: (i) Getting the Regression equation 5 marks
(ii) Prediction of Y: 1 mark
(iii) Testing the significance of regression equation 4 marks

1. Q6. Rock ‘n’ roll is a form of music that evolved in the United States and quickly spread to the rest
of the world. The interest in rock music, like any other genre, has gone through ups and downs over
the years. The Recording Industry Association of America (RIAA) reports consumer trends on the
basis of annual data on genre, format, age, and gender of purchasers and place of purchase. The
accompanying table lists a portion of the percentage (share) of total shipment of music that falls in the
category of rock music from 1991–2008.

Year Share
1991 34.8
1992 31.6
1993 30.2
1994 35.1
1995 33.5
1996 32.6
1997 32.5
1998 25.7
1999 25.2
2000 24.8
2001 24.4
2002 24.7
2003 25.2
2004 23.9
2005 31.5
2006 34
2007 32.4
 2008 31.8

a. Construct a 5-period moving average series for the data

b. Calculate the mean square error and the mean absolute deviation.
Solution
Share 5 year
Year Year (y) MA
1991 1 34.8
1992 2 31.6
1993 3 30.2 33.04
1994 4 35.1 32.6
1995 5 33.5 32.78
1996 6 32.6 31.88
1997 7 32.5 29.9
1998 8 25.7 28.16
1999 9 25.2 26.52
2000 10 24.8 24.96
2001 11 24.4 24.86
2002 12 24.7 24.6
2003 13 25.2 25.94
2004 14 23.9 27.86
2005 15 31.5 29.4
2006 16 34 30.72
2007 17 32.4
2008 18 31.8
2009 19
Total

a. Answer given in the table.

b. MSE = 21.4105 & MAD = 3.69846

Q7. The union representing the Bottle Blowers of America (BBA) is considering a proposal to merge with the
Teamsters Union. According to BBA union bylaws, at least three-fourths of the union membership must
approve any merger. A random sample of 2,000 current BBA members reveals 1,600 plan to vote for the merger
proposal. What is the estimate of the population proportion? Develop a 95% confidence interval for the
population proportion. Basing your decision on this sample information, can you conclude that the necessary
proportion of BBA members favor the merger? Why?
Soln-1

Thus, we estimate that 80% of the population favor the merger proposal. We determine the 95% confidence
interval using formula (9–4). The z value corresponding to the 95% level of confidence is 1.96.

The endpoints of the confidence interval are .782 and .818. The lower endpoint is greater than .75. Hence, we
conclude that the merger proposal will likely pass because the interval estimate includes values greater than
75% of the union membership.
 Q8. Ten students obtained the following marks in Economics & Statistics.

a. Calculate the rank correlation coefficient. (5 Marks)

b. Using 0.05 level of significance, test if there is a positive correlation between marks obtained by
Economics & Statistics. (5 Marks)

Economics Statistics
18 84
36 51
98 91
25 60
75 68
82 62
92 86
62 58
65 35
39 49

Soln:
Rank in Rank in
Economics Statistics Eco Stats D D^2
18 84 10 3 7 49
36 51 8 8 0 0
98 91 1 1 0 0
25 60 9 6 3 9
75 68 4 4 0 0
82 62 3 5 -2 4
92 86 2 2 0 0
62 58 6 7 -1 1
65 35 5 10 -5 25
39 49 7 9 -2 4
Total 92

The rank correlation coefficient is 0.44.

b. Ho: There is no correlation among the ranks

H1: There is positive correlation among the ranks of Economics & Statistics

Critical Value of t = 1.3859

Critical Value of t = 0.44 * SQRT {(10-2)/ 1 – (0.44) ^2}
Table Value of t = 1.860
The computed t of 1.3859 is less than 1.860. Thus, the null hypothesis is not rejected, and We conclude

that there is no correlation in the marks obtained by students in Economics and Statistics.
Best of Luck