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Aditya Sharma
BLP 2020
1
Introduction to Hypothesis
Testing
2
Hypothesis Tests
A hypothesis test is a process that uses sample statistics to test a claim about the value of a
population parameter.
If For Example Microsoft Office 365 Business claims that Entry level employees
such as Interns Or Contractors should be assigned with Only F1 license instead
of E3 To reduce the Cost for the business, sample would be taken to test this
claim.
To test the average of 1000 Users, a pair of hypotheses are stated – one that
represents the claim and the other, its complement. When one of these
hypotheses is false, the other must be true.
3
Stating a Hypothesis
“H subzero” or “H naught”
“H sub-a”
To write the null and alternative hypotheses, translate the claim made about the
population parameter from a verbal statement to a mathematical statement.
4
Stating a Hypothesis
Example:
Write the claim as a mathematical sentence. State the null and alternative hypotheses
and identify which represents the claim.
Microsoft Office 365 Business claims that Entry level employees such as Interns Or
Contractors should be assigned with Only F1 license instead of E3 To reduce the Cost
for the business.
1000
Complement of the
null hypothesis
5
Stating a Hypothesis
Example:
Write the claim as a mathematical sentence. State the null and alternative hypotheses
and identify which represents the claim.
Microsoft Office 365 Business claims that If F1 License Given to more than 40 percent
of their Employees which are Intern or Contractor Instead of E3 to reduce the cost.
0.40
H0: p 0.40 (Claim)
Condition of
H p < 0.40 equality
Complement of the
null hypothesis
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COLLECTED DATA
F1 400
E3 300
E5 200
Calculations:
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Types of Errors
No matter which hypothesis represents the claim, always begin the hypothesis test
assuming that the null hypothesis is true.
A type II error occurs if the null hypothesis is not rejected when it is false.
8
Types of Errors
Actual Truth of H0
Decision H0 is true H0 is false
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Level of Significance
By setting the level of significance at a small value, you are saying that you want the
probability of rejecting a true null hypothesis to be small.
10
P-values
If the null hypothesis is true, a P-value (or probability value) of a hypothesis test is the
probability of obtaining a sample statistic with a value as extreme or more extreme than
the one determined from the sample data.
There are three types of hypothesis tests – a left-, right-, or two-tailed test. The type of
test depends on the region of the sampling distribution that favors a rejection of H0. This
region is indicated by the alternative hypothesis.
11
Left-tailed Test
P is the area to
the left of the test
statistic.
z
-3 -2 -1 0 1 2 3
Test
statistic
12
Right-tailed Test
P is the area to
the right of the
test statistic.
z
-3 -2 -1 0 1 2 3
Test
statistic
13
Two-tailed Test
3. If the alternative hypothesis
1 contains the not-
2
equal-to symbol (), the hypothesis test is a two-
tailed test. In a two-tailed test, each tail has an
area of P.
H0 : μ = k
Ha: μ k
P is twice the area
P is twice the area to the right of the
to the left of the positive test
negative test statistic.
statistic.
z
-3 -2 -1 0 1 2 3
Test Test
statistic statistic
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Making a Decision
Decision Rule Based on P-value
To use a P-value to make a conclusion in a hypothesis test, compare the P-value with .
Claim
Decision Claim is H0 Claim is Ha
There is enough evidence to There is enough evidence to
Reject H0 reject the claim. support the claim.
There is not enough evidence to There is not enough evidence to
Do not reject H0 reject the claim. support the claim.
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Interpreting a Decision
Example:
You perform a hypothesis test for the following claim. How should you interpret your
decision if you reject H0? If you fail to reject H0?
If you fail to reject H0, you should conclude “there is not sufficient evidence to
indicate that the manufacturer’s claim is false.”
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Steps for Hypothesis Testing
=?
3. Determine the
standardized sampling z
0
distribution and draw its
graph.
4. Calculate the test statistic z
and its standardized value. 0
Add it to your sketch. Test statistic
Continued.
17
Steps for Hypothesis Testing
Yes
Reject H0.
7. Write a statement to interpret the decision in the
context of the original claim.
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CONCLUSION
• Hence the Company Claim that Assigning F1 license to 400 users who
are an intern or contractor out of total 1000 users will be the right
decision as it saves the company cost and reduce the waste.
Assigning Starter License To Intern or Contractor instead of giving
more advanced license such as E3 would be much more efficient in
saving the cost as E3 license is more relevant to managers and above
in the organisation.
• Note:- However Due to any IT reasons if any architect or admin
requires advanced licenses such as E3 or E5 then it could be assigned
on request made by the individual.
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