business statistics: a decision-making approach, …business statistics department of quantitative...
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![Page 1: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/1.jpg)
Business Statistics
Department of Quantitative Methods & Information Systems
Dr. Mohammad Zainal QMIS 220
Chapter 10
Estimation and Hypothesis Testing
for Two Population Parameters
![Page 2: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/2.jpg)
Chapter Goals
After completing this chapter, you should be
able to:
Test hypotheses or form interval estimates for
two independent population means
Standard deviations known
Standard deviations unknown
two means from paired samples
the difference between two population proportions
Comparing two population variances QMIS 220, by Dr. M. Zainal Chap 10-2
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Estimation for Two Populations
Estimating two
population values
Population
means,
independent
samples
Paired
samples
Population
proportions
Group 1 vs. independent
Group 2
Same group before vs. after
treatment
Proportion 1 vs. Proportion 2
Examples:
QMIS 220, by Dr. M. Zainal Chap 10-3
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Difference Between Two Means
Population means,
independent
samples
σ1 and σ2 known
σ1 and σ2 unknown but assumed equal
σ1 and σ2 unknown, not assumed equal
Goal: Form a confidence
interval for the difference
between two population
means, μ1 – μ2
The point estimate for the
difference is
x1 – x2
*
QMIS 220, by Dr. M. Zainal Chap 10-4
![Page 5: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/5.jpg)
Independent Samples
Population means,
independent
samples
σ1 and σ2 known
Different data sources
Unrelated
Independent
Sample selected from
one population has no
effect on the sample
selected from the other
population
Use the difference between
2 sample means
*
σ1 and σ2 unknown but assumed equal
σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal Chap 10-5
![Page 6: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/6.jpg)
Population means,
independent
samples
σ1 and σ2 known
σ1 and σ2 known
Assumptions:
Samples are randomly and
independently drawn
population distributions are
normal or both sample sizes
are 30
Population standard
deviations are known
* σ1 and σ2 unknown but assumed equal
σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal Chap 10-6
![Page 7: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/7.jpg)
Population means,
independent
samples
σ1 and σ2 known …and the standard error of
x1 – x2 is
When σ1 and σ2 are known and
both populations are normal or
both sample sizes are at least 30,
the test statistic is a z value…
2
2
2
1
2
1
xx n
σ
n
σσ
21
(continued)
σ1 and σ2 known
* σ1 and σ2 unknown but assumed equal
σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal Chap 10-7
![Page 8: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/8.jpg)
Population means,
independent
samples
σ1 and σ2 known
2
2
2
1
2
1/221
n
σ
n
σxx z
The confidence interval for
μ1 – μ2 is:
σ1 and σ2 known (continued)
* σ1 and σ2 unknown but assumed equal
σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal Chap 10-8
![Page 9: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/9.jpg)
Population means,
independent
samples
σ1 and σ2 known
σ1 and σ2 unknown, large samples
Assumptions: Samples are randomly and independently drawn
Population standard
deviations are unknown
The two standard deviations
are equal
* σ1 and σ2 unknown but assumed equal
σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal Chap 10-9
![Page 10: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/10.jpg)
Population means,
independent
samples
σ1 and σ2 known
σ1 and σ2 unknown, large samples
(continued)
* σ1 and σ2 unknown but assumed equal
Forming interval estimates:
The population standard
deviations are assumed equal,
so use the two sample
standard deviations and pool
them to estimate σ
the test statistic is a t value
with (n1 + n2 – 2) degrees
of freedom σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal Chap 10-10
![Page 11: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/11.jpg)
Population means,
independent
samples
σ1 and σ2 known
σ1 and σ2 unknown, large samples
(continued)
* σ1 and σ2 unknown but assumed equal
The pooled standard
deviation is
2nn
s1ns1ns
21
2
22
2
11p
σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal Chap 10-11
![Page 12: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/12.jpg)
Population means,
independent
samples
σ1 and σ2 known
σ1 and σ2 unknown, large samples
(continued)
* σ1 and σ2 unknown but assumed equal
21
p/221
n
1
n
1stxx
The confidence interval for
μ1 – μ2 is:
Where t/2 has (n1 + n2 – 2) d.f.,
and
2nn
s1ns1ns
21
2
22
2
11p
σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal Chap 10-12
![Page 13: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/13.jpg)
Population means,
independent
samples
σ1 and σ2 known
σ1 and σ2 unknown, small samples
Assumptions: populations are normally distributed
there is a reason to believe
that the populations do not
have equal variances
samples are independent
*
σ1 and σ2 unknown but assumed equal
σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal Chap 10-13
![Page 14: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/14.jpg)
Population means,
independent
samples
σ1 and σ2 known
σ1 and σ2 unknown, small samples
Forming interval
estimates:
The population variances
are not assumed equal, so
we do not pool them
the test statistic is a t value
with degrees of freedom
given by:
(continued)
*
σ1 and σ2 unknown but assumed equal
1n
/ns
1n
/ns
)/ns/n(sdf
2
2
2
2
2
1
2
1
2
1
2
2
2
21
2
1σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal
![Page 15: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/15.jpg)
Population means,
independent
samples
σ1 and σ2 known 2
2
2
1
2
1α/221
n
s
n
stxx
The confidence interval for
μ1 – μ2 is:
σ1 and σ2 unknown, small samples
(continued)
Where t/2 has d.f. given by
*
σ1 and σ2 unknown but assumed equal
1n
/ns
1n
/ns
)/ns/n(sdf
2
2
2
2
2
1
2
1
2
1
2
2
2
21
2
1σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal
![Page 16: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/16.jpg)
Hypothesis Tests for the Difference Between Two Means
Testing Hypotheses about μ1 – μ2
Use the same situations discussed already:
Standard deviations known
Standard deviations unknown
Assumed equal
Assumed not equal
QMIS 220, by Dr. M. Zainal Chap 10-16
![Page 17: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/17.jpg)
Hypothesis Tests for Two Population Proportions
Lower tail test:
H0: μ1 μ2
HA: μ1 < μ2
i.e.,
H0: μ1 – μ2 0
HA: μ1 – μ2 < 0
Upper tail test:
H0: μ1 ≤ μ2
HA: μ1 > μ2
i.e.,
H0: μ1 – μ2 ≤ 0
HA: μ1 – μ2 > 0
Two-tailed test:
H0: μ1 = μ2
HA: μ1 ≠ μ2
i.e.,
H0: μ1 – μ2 = 0
HA: μ1 – μ2 ≠ 0
Two Population Means, Independent Samples
QMIS 220, by Dr. M. Zainal Chap 10-17
![Page 18: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/18.jpg)
Hypothesis tests for μ1 – μ2
Population means, independent samples
σ1 and σ2 known Use a z test statistic
Use sp to estimate unknown
σ , use a t test statistic with
n1 + n2 – 2 d.f.
Use s1 and s2 to estimate
unknown σ1 and σ2 , use a t
test statistic and calculate the
required degrees of freedom
σ1 and σ2 unknown but assumed equal
σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal Chap 10-18
![Page 19: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/19.jpg)
Population means,
independent
samples
σ1 and σ2 known
2
2
2
1
2
1
2121
n
σ
n
σ
μμxxz
The test statistic for
μ1 – μ2 is:
σ1 and σ2 known
* σ1 and σ2 unknown but assumed equal
σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal Chap 10-19
![Page 20: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/20.jpg)
Population means,
independent
samples
σ1 and σ2 known
σ1 and σ2 unknown, large samples
* σ1 and σ2 unknown but assumed equal
Where t has (n1 + n2 – 2) d.f.,
and
2nn
s1ns1ns
21
2
22
2
11p
21
p
2121
n
1
n
1s
μμxxt
The test statistic for
μ1 – μ2 is:
σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal Chap 10-20
![Page 21: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/21.jpg)
Population means,
independent
samples
σ1 and σ2 known
σ1 and σ2 unknown, small samples
The test statistic for
μ1 – μ2 is:
*
σ1 and σ2 unknown but assumed equal
2
2
2
1
2
1
2121
n
s
n
s
μμxxt
Where t has d.f. given by
1n
/ns
1n
/ns
)/ns/n(sdf
2
2
2
2
2
1
2
1
2
1
2
2
2
21
2
1σ1 and σ2 unknown, not assumed equal
QMIS 220, by Dr. M. Zainal
![Page 22: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/22.jpg)
Two Population Means, Independent Samples
Lower tail test:
H0: μ1 – μ2 0
HA: μ1 – μ2 < 0
Upper tail test:
H0: μ1 – μ2 ≤ 0
HA: μ1 – μ2 > 0
Two-tailed test:
H0: μ1 – μ2 = 0
HA: μ1 – μ2 ≠ 0
/2 /2
-z -z/2 z z/2
Reject H0 if z < -z Reject H0 if z > z Reject H0 if z < -z/2
or z > z/2
Hypothesis tests for μ1 – μ2
Example: σ1 and σ2 known:
QMIS 220, by Dr. M. Zainal Chap 10-22
![Page 23: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/23.jpg)
Pooled sp t Test Example σ1 and σ2 unknown, assumed equal
You’re a financial analyst for a brokerage firm. Is there a
difference in dividend yield between stocks listed on the
NYSE & NASDAQ? You collect the following data:
NYSE NASDAQ
Number 21 25
Sample mean 3.27 2.53
Sample std dev 1.30 1.16
Assuming equal variances, is
there a difference in average
yield ( = 0.05)?
QMIS 220, by Dr. M. Zainal Chap 10-23
![Page 24: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/24.jpg)
Calculating the Test Statistic
1.2256
22521
1.161251.30121
2nn
s1ns1ns
22
21
2
22
2
11p
2.040
25
1
21
11.2256
02.533.27
n
1
n
1s
μμxxt
21
p
2121
The test statistic is:
Where:
QMIS 220, by Dr. M. Zainal Chap 10-24
![Page 25: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/25.jpg)
Solution
H0: μ1 - μ2 = 0 i.e. (μ1 = μ2)
HA: μ1 - μ2 ≠ 0 i.e. (μ1 ≠ μ2)
= 0.05
df = 21 + 25 - 2 = 44
Critical Values: t = ± 2.0154
Test Statistic: Decision:
Conclusion:
Reject H0 at = 0.05
There is evidence that
the means are different.
t 0 2.0154 -2.0154
.025
Reject H0 Reject H0
.025
2.040
2.040
25
1
21
11.2256
2.533.27t
QMIS 220, by Dr. M. Zainal Chap 10-25
![Page 26: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/26.jpg)
Paired Samples
Tests Means of 2 Related Populations
Paired or matched samples
Repeated measures (before/after)
Use difference between paired values:
Eliminates Variation Among Subjects
Assumptions:
Both Populations Are Normally Distributed
Or, if Not Normal, use large samples
Paired
samples
d = x1 - x2
QMIS 220, by Dr. M. Zainal Chap 10-26
![Page 27: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/27.jpg)
Paired Differences
The ith paired difference is di , where
Paired
samples di = x1i - x2i
The point estimate for
the population mean
paired difference is d :
1n
)d(d
s
n
1i
2
i
d
n
d
d
n
1i
i
The sample standard
deviation is
n is the number of pairs in the paired sample
QMIS 220, by Dr. M. Zainal Chap 10-27
![Page 28: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/28.jpg)
Paired Differences
The confidence interval for d is Paired
samples
1n
)d(d
s
n
1i
2
i
d
n
std d
Where t has n - 1 d.f. and sd is:
(continued)
n is the number of pairs in the paired sample
QMIS 220, by Dr. M. Zainal Chap 10-28
![Page 29: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/29.jpg)
The test statistic for d is Paired
samples
1n
)d(d
s
n
1i
2
i
d
n
s
μdt
d
d
Where t has n - 1 d.f.
and sd is:
n is the
number
of pairs
in the
paired
sample
Hypothesis Testing for Paired Samples
QMIS 220, by Dr. M. Zainal Chap 10-29
![Page 30: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/30.jpg)
Lower tail test:
H0: μd 0
HA: μd < 0
Upper tail test:
H0: μd ≤ 0
HA: μd > 0
Two-tailed test:
H0: μd = 0
HA: μd ≠ 0
Paired Samples
Hypothesis Testing for Paired Samples
/2 /2
-t -t/2 t t/2
Reject H0 if t < -t Reject H0 if t > t Reject H0 if t < -t/2
or t > t/2 Where t has n - 1 d.f.
(continued)
QMIS 220, by Dr. M. Zainal Chap 10-30
![Page 31: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/31.jpg)
Assume you send your salespeople to a “customer
service” training workshop. Is the training effective?
You collect the following data:
Paired Samples Example
Number of Complaints: (2) - (1)
Salesperson Before (1) After (2) Difference, di
C.B. 6 4 - 2
T.F. 20 6 -14
M.H. 3 2 - 1
R.K. 0 0 0
M.O. 4 0 - 4
-21
d = di
n
5.67
1n
)d(ds
2
i
d
= -4.2
QMIS 220, by Dr. M. Zainal Chap 10-31
![Page 32: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/32.jpg)
Has the training made a difference in the number of
complaints (at the 0.05 level)?
- 4.2 d =
1.6655.67/
04.2
n/s
μdt
d
d
H0: μd = 0
HA: μd 0
Test Statistic:
Critical Value = ± 2.7765 d.f. = n - 1 = 4
Reject
/2
- 2.7765 2.7765
Decision: Do not reject H0
(t stat is not in the reject region)
Conclusion: There is not a
significant change in the
number of complaints.
Paired Samples: Solution
Reject
/2
- 1.66 = .05
QMIS 220, by Dr. M. Zainal Chap 10-32
![Page 33: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/33.jpg)
Two Population Proportions
Goal: Form a confidence interval for
or test a hypothesis about the
difference between two population
proportions, P1 – P2
The point estimate for
the difference is 𝑝 1 – 𝑝 2
Population
proportions
Assumptions:
n1P1 5 , n1(1-P1) 5
n2P2 5 , n2(1-P2) 5
QMIS 220, by Dr. M. Zainal Chap 10-33
![Page 34: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/34.jpg)
Confidence Interval for Two Population Proportions
Population
proportions
2
22
1
1121
n
)p(1p
n
)p(1pzpp
The confidence interval for
P1 – P2 is:
QMIS 220, by Dr. M. Zainal Chap 10-34
![Page 35: Business Statistics: A Decision-Making Approach, …Business Statistics Department of Quantitative Methods & Information Systems QMIS 220 Dr. Mohammad Zainal Chapter 10 Estimation](https://reader030.vdocuments.us/reader030/viewer/2022040115/5e6c56588a33c0649b0b29dd/html5/thumbnails/35.jpg)
Hypothesis Tests for Two Population Proportions
Population proportions
Lower tail test:
H0: P1 P2
HA: P1 < P2
i.e.,
H0: P1 – P2 0
HA: P1 – P2 < 0
Upper tail test:
H0: P1 ≤ P2
HA: P1 > P2
i.e.,
H0: P1 – P2 ≤ 0
HA: P1 – P2 > 0
Two-tailed test:
H0: P1 = P2
HA: P1 ≠ P2
i.e.,
H0: P1 – P2 = 0
HA: P1 – P2 ≠ 0
QMIS 220, by Dr. M. Zainal Chap 10-35
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Two Population Proportions
Population
proportions
21
21
21
2211
nn
xx
nn
pnpnp
The pooled estimate for the
overall proportion is:
where x1 and x2 are the numbers from
samples 1 and 2 with the characteristic of interest
Since we begin by assuming the null
hypothesis is true, we assume P1 = P2
and pool the two p estimates
QMIS 220, by Dr. M. Zainal Chap 10-36
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Two Population Proportions
Population
proportions
21
2121
n
1
n
1)p(1p
PPppz
The test statistic for
P1 – P2 is:
(continued)
QMIS 220, by Dr. M. Zainal Chap 10-37
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Hypothesis Tests for Two Population Proportions
Population proportions
Lower tail test:
H0: P1 – P2 0
HA: P1 – P2 < 0
Upper tail test:
H0: P1 – P2 ≤ 0
HA: P1 – P2 > 0
Two-tailed test:
H0: P1 – P2 = 0
HA: P1 – P2 ≠ 0
/2 /2
-z -z/2 z z/2
Reject H0 if z < -z Reject H0 if z > z Reject H0 if z < -z/2
or z > z/2
QMIS 220, by Dr. M. Zainal Chap 10-38
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Example: Two population Proportions
Is there a significant difference between the
proportion of men and the proportion of
women who will vote Yes on Proposition A?
In a random sample, 36 of 72 men and 31 of
50 women indicated they would vote Yes
Test at the .05 level of significance
QMIS 220, by Dr. M. Zainal Chap 10-39
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The hypothesis test is:
H0: P1 – P2 = 0 (the two proportions are equal)
HA: P1 – P2 ≠ 0 (there is a significant difference between proportions)
The sample proportions are:
Men: p1 = 36/72 = .50
Women: p2 = 31/50 = .62
.549122
67
5072
3136
nn
xxp
21
21
The pooled estimate for the overall proportion is:
Example: Two population Proportions
(continued)
QMIS 220, by Dr. M. Zainal Chap 10-40
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The test statistic for P1 – P2 is:
Example: Two population Proportions
(continued)
.025
-1.96 1.96
.025
-1.31
Decision: Do not reject H0
Conclusion: There is not
significant evidence of a
difference in the proportion
who will vote yes between
men and women.
1.31
50
1
72
1.549)(1.549
0.62.50
n
1
n
1)p(1p
PPppz
21
2121
Reject H0 Reject H0
Critical Values = ±1.96 For = .05
QMIS 220, by Dr. M. Zainal Chap 10-41
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Two Sample Tests in EXCEL
For independent samples:
Independent sample z test with variances known:
Data | data analysis | z-Test: Two Sample for Means
Independent sample t test with variance unknown:
Data | data analysis | t-Test: Two Sample Assuming Equal
Variances
Data | data analysis | t-Test: Two Sample Assuming Unequal
Variances
For paired samples (t test):
Data | data analysis… | t-Test: Paired Two Sample for Means
QMIS 220, by Dr. M. Zainal Chap 10-42
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Comparing Two Population
Variances (F – Test)
QMIS 220, by Dr. M. Zainal Chap 8-43
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Hypothesis Tests for Variances
Tests for Two
Population Variances
F test statistic
*
F Test for Difference in Two Population Variances
H0: σ12 = σ2
2
HA: σ12 ≠ σ2
2 Two tailed test
Lower tail test
Upper tail test
H0: σ12 σ2
2
HA: σ12 < σ2
2
H0: σ12 ≤ σ2
2
HA: σ12 > σ2
2
QMIS 220, by Dr. M. Zainal Chap 11-44
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Hypothesis Tests for Variances
F test statistic *
F Test for Difference in Two Population Variances
Tests for Two
Population Variances 2
2
2
1
s
sF
The F test statistic is:
= Variance of Sample 1
D1 = n1 - 1 = numerator degrees of freedom
D2 = n2 - 1 = denominator degrees of freedom
= Variance of Sample 2
2
1s
2
2s
Where F has D1
numerator and D2
denominator
degrees of freedom
QMIS 220, by Dr. M. Zainal Chap 11-45
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The F critical value is found from the F table
The are two appropriate degrees of freedom:
D1 (numerator) and D2 (denominator)
In the F table,
numerator degrees of freedom determine the column
denominator degrees of freedom determine the row
The F Distribution
where D1 = n1 – 1 ; D2 = n2 – 1 2
2
2
1
s
sF
QMIS 220, by Dr. M. Zainal Chap 11-46
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The F distribution is continuous and skewed to the right.
The units of an F distribution, denoted by F ,D1,D2 are
nonnegative.
The F Distribution
QMIS 220, by Dr. M. Zainal Chap 11-47
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Finding the F Value
QMIS 220, by Dr. M. Zainal Chap 11-48
Example: Find the F value for 4 degrees of freedom for the
numerator, 10 degrees of freedom for the denominator, and
0.1 area in the right tail of F distribution curve. (F .1, 4,10)
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For a two-tailed test, always place the larger
sample variance in the numerator
For a one-tailed test, consider the alternative
hypothesis: place in the numerator the sample
variance for the population that is predicted
(based on HA) to have the larger variance
Formulating the F Ratio
where df1 = the size of the sample having the larger variance - 1
2
2
2
1
2
2
2
1
and ofsmaller the
and oflarger the
ss
ssF
QMIS 220, by Dr. M. Zainal Chap 11-49
df2 = the size of the sample having the smaller variance - 1
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F 0
rejection region for a one-tail test is
Finding the Critical Value
F 0
2/2
2
2
1 Fs
sF F
s
sF
2
2
2
1
(where the larger sample variance in the numerator)
rejection region for a two-tailed test is
/2
F F/2 Reject H0 Do not
reject H0
Reject H0 Do not reject H0
H0: σ12 = σ2
2
HA: σ12 ≠ σ2
2
H0: σ12 σ2
2
HA: σ12 < σ2
2
H0: σ12 ≤ σ2
2
HA: σ12 > σ2
2
QMIS 220, by Dr. M. Zainal Chap 11-50
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F Test: An Example
You are a financial analyst for a brokerage firm. You
want to compare dividend yields between stocks listed
on the NYSE & NASDAQ. You collect the following data:
NYSE NASDAQ
Number 21 25
Mean 3.27 2.53
Std dev 1.30 1.16
Is there a difference in the
variances between the NYSE
& NASDAQ at the = 0.05 level?
QMIS 220, by Dr. M. Zainal Chap 11-51
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F Test: Example Solution
Form the hypothesis test:
H0: σ21 = σ2
2 (there is no difference between variances)
HA: σ21 ≠ σ2
2 (there is a difference between variances)
Find the F critical value for = .05:
Numerator:
D1 = n1 – 1 = 21 – 1 = 20
Denominator:
D2 = n2 – 1 = 25 – 1 = 24
F.05/2, 20, 24 = 2.327
QMIS 220, by Dr. M. Zainal Chap 11-52
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The test statistic is:
0
256.116.1
30.1
s
sF
2
2
2
2
2
1
/2 = .025
F/2 =2.327
Reject H0 Do not reject H0
H0: σ12 = σ2
2
HA: σ12 ≠ σ2
2
F Test: Example Solution
F = 1.256 is not greater than
the critical F value of 2.327, so
we do not reject H0
(continued)
Conclusion: There is no evidence of a
difference in variances at = .05
QMIS 220, by Dr. M. Zainal Chap 11-53
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Using EXCEL
EXCEL
F test for two variances:
Data | Data Analysis | F-test: Two Sample for Variances
QMIS 220, by Dr. M. Zainal Chap 11-54
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Chapter Summary
Compared two independent samples
Formed confidence intervals for the differences between two
means
Performed z test for the differences in two means
Performed t test for the differences in two means
Compared two related samples (paired samples)
Formed confidence intervals for the paired difference
Performed paired sample t tests for the mean difference
Compared two population proportions
Formed confidence intervals for the difference between two
population proportions
Performed z test for two population proportions
QMIS 220, by Dr. M. Zainal Chap 10-55
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Problems
QMIS 220, by Dr. M. Zainal
A business analyst took a random sample of 32 advertising
managers from across the United States and a similar random
sample is taken of 34 auditing managers. They were asked
what their annual salary is. The analyst wants to test whether
there is a difference in the average wage of an advertising
manager and the auditing manager. The resulting salary data
are listed in the table below with the sample means, population
standard deviations and variances.
164.264
253.16
700.70
32
2
1
1
1
1
x
n
411.166
900.12
187.62
34
2
2
2
2
2
x
n
Advertising Auditing
Chap 10-56
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Chap 10-57 QMIS 220, by Dr. M. Zainal
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Chap 10-58 QMIS 220, by Dr. M. Zainal
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z-Test: Two Sample for Means
Adv Mgr Auditing Mgr
Mean 70.7001 62.187
Known Variance 264.164 166.411
Observations 32 34
Hypothesized Mean Difference 0
z 2.35
P(Z<=z) one-tail 0.0094
z Critical one-tail 1.64
P(Z<=z) two-tail 0.0189
z Critical two-tail 1.960
Chap 10-59 QMIS 220, by Dr. M. Zainal
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Problems
QMIS 220, by Dr. M. Zainal
A consumer test group wants to determine the difference in
gasoline mileage of cars using regular gas and cars using
premium gas. Their researchers divided a fleet of 100 cars of
the same make in half and tested each car on one tank of gas.
50 of the cars were filled with regular gas and the rest filled
with premium gas. The sample average for the regular gasoline
group was 21.45 mpg, and the sample average for the
premium gasoline was 24.60. Assume the population standard
deviation of the regular gasoline is 3.46 mpg, and the
population standard deviation of the premium gas is 2.99 mpg.
Construct a 95% confidence interval to estimate the difference
in the mean gas mileage between the cars using regular and
premium gasoline.
Chap 10-60
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Chap 10-61 QMIS 220, by Dr. M. Zainal
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Problems
QMIS 220, by Dr. M. Zainal
At a certain company, new employees are expected to attend a
3 days seminar (Method A) to learn about the company. At the
end of the seminar, they are tested to measure their knowledge
about the company. The management decided to experiment
another training procedure (Method B) which ends with the
same knowledge test but saves a lot of time and money. To test
the effectiveness of the new method (B), managers randomly
selected two groups and the results were recorded in the
following tables. Using = 5%, the managers want to
determine whether there is a significant difference in the mean
score of the two groups assuming the score of the test are
normally distributed and the population variances are
approximately equal.
Chap 10-62
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Training Method A
56 51 45
47 52 43
42 53 52
50 42 48
47 44 44
Training Method B
59
52
53
54
57
56
55
64
53
65
53
57
495.19
73.47
15
2
1
1
1
s
x
n
273.18
5.56
12
2
2
2
2
s
x
n
Chap 10-63 QMIS 220, by Dr. M. Zainal
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Chap 10-64 QMIS 220, by Dr. M. Zainal
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t-Test: Two-Sample Assuming Equal Variances
A B
Mean 4 7.73 56.5
Variance 19.495 18.27
Observations 15 12
Pooled Variance 18.957
Hypothesized Mean Difference 0
df 25
t Stat - 5.20
P(T<=t) one-tail 1.12E-05
t Critical one-tail 1.71
P(T<=t) two-tail 2.23E-05
t Critical two-tail 2.06
Chap 10-66 QMIS 220, by Dr. M. Zainal
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Problems
QMIS 220, by Dr. M. Zainal
A coffee manufacturer is interested in estimating the difference
in the average daily coffee consumption of a regular coffee
drinker and decaffeinated coffee drinker. Its researcher
randomly selects 13 regular coffee drinkers and asks how
many cups of coffee per day they drink. He randomly locates
15 decaffeinated coffee drinkers and how many cups of coffee
per day they drink. The average for the regular coffee drinkers
is 4.35 cups, with a standard deviation of 1.2 cups. The
average of the decaffeinated-coffee drinkers is 6.84 cups, with
a standard deviation of 1.42 cups. The researcher assumes, for
each population, that the daily consumption is normally
distributed, and their variances are approximately equal. He
wants to construct a 95% confidence interval to estimate the
difference in the averages of the two populations.
Chap 10-67
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Chap 10-68 QMIS 220, by Dr. M. Zainal
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Chap 10-69 QMIS 220, by Dr. M. Zainal
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Problems
QMIS 220, by Dr. M. Zainal
Suppose a stock market investor is interested in determining
whether there is a significant difference in P/E (price to
earning) ratio for companies from one year to the next. He
randomly samples nine companies and records the P/E ratios
for each of these companies at the end of the year 1 and 2.
Assume there is no prior information to indicate whether P/E
ratios have gone up or down. Also, assume that the P/E ratios
are normally distributed in the population. The data are shown
in the next table. (Use = 1%)
Chap 10-70
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Company Year1 P/E Ratio Year2 P/E Ratio
1 8.9 12.7
2 38.1 45.4
3 43.0 10.0
4 34.0 27.2
5 34.5 22.8
6 15.2 24.1
7 20.3 32.3
8 19.9 40.1
9 61.9 106.5
Chap 10-71 QMIS 220, by Dr. M. Zainal
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Company Year1 P/E Ratio Year2 P/E Ratio d
1 8.9 12.7 -3.8
2 38.1 45.4 -7.3
3 43.0 10.0 33.0
4 34.0 27.2 6.8
5 34.5 22.8 11.7
6 15.2 24.1 -8.9
7 20.3 32.3 -12.0
8 19.9 40.1 -20.2
9 61.9 106.5 -44.6
Chap 10-72 QMIS 220, by Dr. M. Zainal
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QMIS 220, by Dr. M. Zainal
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t-Test: Paired Two Sample for Means
Year1 P/E
Ratio
Year2 P/E
Ratio
Mean 30.64 35.68
Variance 268.1 837.5
Observations 9 9
Pearson Correlation 0.674
Hypothesized Mean Difference 0
df 8
t Stat -0.7
P(T<=t) one-tail 0.252
t Critical one-tail 1.86
P(T<=t) two-tail 0.504
t Critical two-tail 2.306
Chap 10-74 QMIS 220, by Dr. M. Zainal
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Problems
QMIS 220, by Dr. M. Zainal
Time magazine reported the result of a telephone poll of 800
adult Americans. The question posed of the Americans who
were surveyed was: "Should the federal tax on cigarettes be
raised to pay for health care reform?" The results of the survey
were:
Chap 10-75
Non-Smokers Smokers
n1 = 605 N2 = 195
Said yes = 351 Said yes = 41
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Chap 10-76 QMIS 220, by Dr. M. Zainal
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Problems
QMIS 220, by Dr. M. Zainal
A random sample of 10 hot drinks from Dispenser A had a
mean volume of 203 ml and a standard deviation of 3 ml.
Another random sample of 15 hot drinks from Dispenser B
gave corresponding values of 206 ml and 5 ml. The amount
dispensed by each machine may be assumed to be normally
distributed. Test, at the 5% significance level, the hypothesis
that there is no difference in the variability of the volume
dispensed by the two machines.
Chap 11-77
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QMIS 220, by Dr. M. Zainal Chap 11-78
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QMIS 220, by Dr. M. Zainal Chap 11-79
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Copyright
The materials of this presentation were mostly
taken from the PowerPoint files accompanied
Business Statistics: A Decision-Making Approach,
7e © 2008 Prentice-Hall, Inc.
QMIS 220, by Dr. M. Zainal Chap 10-80