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Practise Problem3
Practise Problem3
1. The time required for servicing transmissions is normally distributed with = 45 min
and = 8 min. The service manager plans to have work begin on the transmission of
a customer’s car 10 min after the car is dropped off and the customer is told that the
car will be ready within 1 hour from drop-off. What is the probability that the service
manager cannot meet his commitment?
A. 0.3875
B. 0.2676
C. 0.5
D. 0.6987
2. The current age (in years) of 400 clerical employees at an insurance claims processing
center is normally distributed with mean 38 and SD 6. For each statement below,
please specify True/False. If false, briefly explain why.
A. More employees at the processing center are older than 44 than between 38
and 44.
B. A training program for employees under the age of 30 at the center would
be expected to attract about 36 employees.
Consider a company that has two different divisions. The annual profits from the two
divisions are independent and have distributions Profit1 ~ N(5, 32) and Profit2 ~ N(7, 42)
respectively. Both the numbers are in $ Million. Answer the following questions about the
total profit of the company in Million Rupees. Assume that $1 = Rs. 45
3. Specify a range centered on the mean such that it contains 95% probability for the
annual profit of the company.
A. [169,911]
B. [99,981]
C. [340,740]
D. [-135,1215]
4. Specify the 5th percentile of profit (in Rupees) for the company
A. 170
B. 240
C. 310
D. 380
5. Which of the two divisions has a larger probability of making a loss in a given year?
A. Division 1
B. Division 2
C. Both have equal chance
D. Cannot be determined
Topics: Sampling Variation and Central Limit Theorem
1) The manager of a warehouse monitors the volume of shipments made by the delivery
team. The automated tracking system tracks every package as it moves through the
facility. Based on current contracts with customers, the weights should have μ = 22
lbs. and σ = 5 lbs. A sample of 25 packages is selected and weighed every day. Suppose
the manager is analyzing data of daily averages for a period of 100 days. What is the
approximate standard deviation of these data?
A. 5
B. 1
C. 0.5
D. 0.25
2) An educational startup that helps MBA aspirants write their essays is targeting
individuals who have taken GMAT in 2012 and have expressed interest in applying
to FT top 20 b-schools. There are 40000 such individuals with an average GMAT score
of 720 and a standard deviation of 120. The scores are distributed between 650 and 790
with a very long and thin tail towards the higher end resulting in substantial
skewness. Which of the following is likely to be true for randomly chosen samples of
aspirants?
a. The standard deviation of the scores within any sample will be 120.
b. The standard deviation of the mean of across several samples will be 120.
c. The mean score in any sample will be 720.
d. The average of the mean across several samples will be 720.
3) At the beginning of your stay at ISB, you started a YouTube channel to host videos of
your b-school life so that your friends and family can remain connected with you. You
posted a total of 240 videos, roughly one for every working day. You are analyzing
the data dump available from Google Analytics at the end of the year. Among your
500 Facebook friends, who subscribed to your channel, the average number of views
is 25 with a standard deviation of 50. Google Analytics allows you to choose a random
sample of 25 friends and send them an online gaming credit for every view of your
channel as a token of appreciation. What is the approximate probability that you will
shell out less than 20 credits?
1. 30%
2. 6%
3. 0%
4. 1.25%
5) The auditors from the above example would like to maintain the probability of
investigation to 5%. Which of the following represents the minimum number
transactions that they should sample if they do not want to change the thresholds of
45 and 55?
A. 144
B. 150
C. 196
D. 250
a) The sample size of the survey should at least be a fixed percentage of the
population size in order to produce representative results.
b) The sampling frame is a list of every item that appears in a survey sample,
including those that did not respond to questions.
c) Larger surveys convey a more accurate impression of the population than smaller
surveys.
a) The population
b) The parameter of interest
c) The sampling frame
d) The sample size
e) The sampling design
f) Any potential sources of bias or other problems with the survey or sample
3) For each of the following statements, indicate whether it is True/False. If false,
explain why.
2. If the 95% confidence interval for the number of moviegoers who purchase
concessions is 30% to 45%, this means that fewer than half of all moviegoers
purchase concessions.
3. The 95% Confidence-Interval for μ only applies if the sample data are nearly
normally distributed.
4) What is the chance that mean of a random sample will be greater than the mean of
the population from which the sample is collected?
i) 0.25
j) 0.5
k) 0.75
l) 1
The average purchase amount at a retailer’s online site is $80. The retailer is evaluating
a new design for its website that, it hopes, would encourage shoppers to spend more.
Let μ represent the average amount spent per customer at its redesigned website.
d) The appropriate null hypothesis for testing the profitability of the new design is
H0: μ ≤ 80.
e) If the p-value of the test is less than , then we will always commit a Type II error.
f) If the p-value of the test is less than , then we will always commit a Type I error.
g) If H0 is true, then any sample will have a sample proportion (p) less than 0.40.
h) The p-value of the test of the null hypothesis in this example is the probability that the
investment service will be profitable.
3) Banks frequently compete by adding special services that distinguish them from
rivals. These services can be expensive to provide. A bank hopes to retain customers
that keep high balances in accounts with low interest rates. Typical customers at this
bank keep an average balance of $3,500 in savings accounts that pay 2% interest
annually. The bank loans this money to other customers at an average rate of 6%,
thereby earning a 4% profit on these balances. A random sample of 65 customers was
offered a special “personalized” account. After 3 months, the average balance in the
2% savings accounts for these customers was $5,000 (s = $3,000). The personalized
service costs the bank $50 extra per customer per year over the costs of a normal
savings account. Is this personalized account offering going to be more profitable than
the normal savings account?
4) The weights of the cereal boxes follow a normal distribution with mean 16.3 oz and
std dev 0.2 oz. Suppose the manager decides to stop the packaging process and
conduct an investigation if a cereal box with weight lower than 15.9 oz is observed.
What is the probability of Type I error with this decision rule?
a. 0.0125
b. 0.025
c. 0.05
d. 0.10