HYPOTHESIS TESTING

Worksheet

1. A business school in its advertisement claims that the average salary of its graduates in a
particular lean year is at par with the average salaries of Rs. 750,000 offered at the top five
business schools. A sample of 30 graduates, from the business school whose claim was to
be verified, was taken at random. Their salaries are given in ‘Salary’ file. Check the validity
of the claim.

2. CadSoft, a producer of computer-aided design software for the aerospace industry receives
numerous calls for technical support. In the past, the average response time has been at
least 25 minutes. The company has upgraded its information systems and believes that this
will help reduce response time. As a result, it believes that the average response time can
be reduced to less than 25 minutes. Refer to the CadSoft Technical Support Response Time
file. Do you think they have achieved their target?

3. A manufacturer supplies the rear axles for U.S. Portal Service mail trucks. These axles
must be able to withstand 80,000 pounds per square inch in stress test, but an
excessively strong axle raises production cost significantly. Long experience indicates
that the standard deviation of the strength of its axles is 4000 pounds per square inch.
The manufacturer selects a sample of 100 axles from production, tests them and finds
that the mean stress capacity of the sample is 79600 pounds per square inch. If the axle
manufacturer uses a significance level of 0.05 in testing, will the axles meet the stress
requirements?

4. The management of Priority Health Club claims that its members lose an average of 10
pounds or more within the first month after joining the club. A consumer agency that
wanted to check this claim took a random sample of 36 members of this health club and
found that they lost an average of 9.2 pounds within the first month of membership with a
standard deviation of 2.4 pounds. What will your decision be if α = .01? What if α =
.05?

5. Grand Auto Corporation produces auto batteries. The company claims that its top-of-the
line Never Die batteries are good, on average, for at least 65 months. A consumer protection
agency tested 15 such batteries to check this claim. It found the mean life of these 15 bat-
teries to be 63 months with a standard deviation of 2 months. At the 5% significance level,
can you conclude that the claim of the company is true? Assume that the life of such a
battery has an approximately normal distribution

6. An officer of the health department claims that 60 per cent of the male population of a
village comprises smokers. A random sample of 50 males showed that 35 of them were
smokers. Are these sample results consistent with the claim of the health officer? Use a
level of significance of 0.05.

7. At Canon Food Corporation, it took an average of 50 minutes for new workers to learn a
food processing job. Recently the company installed a new food processing machine. The
 supervisor at the company wants to find if the mean time taken by new workers to learn
the food processing procedure on this new machine is different from 50 minutes. A sample
of 40 workers showed that it took, on average, 47 minutes for them to learn the food
processing procedure on the new machine with a standard deviation of 7 minutes. What
will your conclusion be if α = .01.

8. The mayor of a large city claims that the average net worth of families living in this city is
at least $300,000. A random sample of 100 families selected from this city produced a mean
net worth of $288,000 with a standard deviation of 58,000. Using the 2.5% significance level,
can you conclude that the mayor's claim is false?

9. A sample of 14 cans of Brand I diet soda gave the mean number of calories of 23 per can
with a standard deviation of 3 calories. Another sample of 16 cans of Brand II diet soda the
mean number of calories of 25 per can with a standard deviation of 4 calories. At 1%
significance level, can you conclude that the mean numbers of calories per can are different
for these two brands of diet soda? Assume that the calories per can of diet soda normally
distributed for each of the two brands and that the standard deviations for the two
populations are equal.

10. A company selects eight salesmen at random and their sales figures for the previous month
are recorded. They then undergo a training course devised by a business consultant, and
their sales figures for the following month are compared as shown in the table. Has the
training course caused an improvement in the salesmen's ability? You may use a 0.05 level
of significance.

Previous Month 75 90 94 95 100 90 70 64

11. According to US Bureau of the Census, the average salary of full time state employees was
$ 49, 056 in New York and $ 46, 800 in Boston in 2001. Suppose the mean salaries are
based on random samples of 500 employees from New York & that of 400 from Boston,
and the population standard deviations in those two states were $9000 and $ 8500.
a) What is the point estimate of µ1 and µ2 ?
b) Construct a 95% confidence interval for the difference between the mean salaries
of all the employees in these two states.
c) Test at 1% level of significance that the mean salaries of full time employees in the
two states are different.

12. A consumer agency wanted to estimate the difference in the mean amount of caffeine in
two brands of coffee. The agency took a sample of 15 one-pound jars of Brand I that
showed the mean amount of caffeine in these jars to be 80 mg per jar with a standard
deviation of 5 mg. Another sample of 12 one-pound jars of Brand II coffee gave a mean
amount of caffeine equal to 77 mg per jar with a standard deviation of 6 mg. Construct a
 95% confidence interval for the difference between the mean amounts of caffeine in one-
pound jars in these two brands. Assume that the two populations are normally distributed
with equal standard deviations. AT 1% level of significance, can you conclude that the
mean amounts of caffeine are different for these two brands of coffee?

13. A researcher wanted to find the effect of a special diet on B.P. She selected a sample of
seven adults and put them on this dietary plan for three months. The following table gives
the B.P. of seven adults before & after the completion of this plan.
Before 210 180 195 220 231 199 224
After 193 186 186 223 220 183 233

Let µd be the mean reduction in the B.P. due to this special dietary plan for the population
of all adults. Using a 1% level of significance, can you conclude that researcher’s dietary
plan was effective?

14. A study was conducted to compare the efficiency of the workers of two mines, one with
private ownership and the other with government ownership. The researcher was of the
view that there is no significant difference in their efficiency level. Total tonnage of the
mineral mined by a worker in one shift was chosen as the criteria to assess his efficiency.
Twenty workers from the private sector mine and 24 from the government owned mine
were selected and their average output per shift was recorded. The data obtained is given
in ‘Mine Data’ file. Assess whether the efficiency of the workers of the two mines are the
same.

15. A corporate training institution claimed that its training program can greatly enhance the
efficiency of call centre employees. A big call centre sent some of its employees for the
training program. The efficiency was measured by the number of deals closed by each
employee in a one-month period. Data was collected for a one-month period before sending
the employees for training program. After the training program, data were again collected
on the same employees for a one-month period. Please refer to the SPSS file ‘Efficiency’.
Check whether the training has significantly helped the employees to increase their
efficiency.

16. An oil company has introduced a new brand of gasoline in its outlets in three major metro
cities. However, they are not sure how the new brand is selling places since there is a lot
of difference in the driving habits of people in the three metros. The company selected 10
outlets in each city and tabulated the data on an average daily sale at each of the selected
outlets. The data is presented in ‘Gasoline’ file. Assess whether there is any significant
difference in average selling across the three metros.

17. An MBA aspirant was interested in knowing the impact of educational background (arts /
commerce and science / engineering) on the final placement salaries. He is also aware that
the previous work experience has an impact on the salaries. Therefore, he chooses
educational background and work experience as two independent variables. Based on
educational background, respondents are categorized into two groups – one belonging to
the arts and commerce stream and the other belonging to the science and engineering
stream. Based on previous work experience, respondents are again categorized into two
groups – one with experience and the other without experience. A sample of 30 students is
randomly chosen and their salaries from campus recruitment as well as information on
educational background and work experience are given in SPSS file ‘MBA Salary’. Extend
your recommendation to the MBA aspirant.