Practice Problems

Problems on Descriptive Statistics

These illustrations are to make you comfortable with R usage also.

1) A manufacturing company produces steel housings. The main component part is a steel
trough whose width is required to be between 8.31 inches and 8.61 inches. The data is
given in the data file Trough.xlsx.
a) Calculate summary statistics and interpret these numbers. What can you conclude
about the number of troughs that will meet the company’s requirement?
b) List the 5-number summary.
c) Construct a boxplot and describe its shape.
Once data is imported in R you will have a data frame Trough containing one variable
Width. Use
> attach(Trough)
So that at every step you do not have to call the variable using complete address
Trough$Width

2) The following boxplot and histogram are constructed on a variable (Density) observed on
50 different types of wines.

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 Answer the following questions based on the above diagrams.

a) What are the minimum and maximum values of density? What are the first, second
and third quartiles? Are there any outliers in the data?
b) What can you say about the shape of the distribution?
c) What is the probability that a randomly chosen wine will have density between 0.997
and 0.999?
d) Which is the modal class?

Comment: Ordinarily just by looking at the histogram and/or boxplot it is not possible to
identify the minimum or the maximum value (WHY?).

Problems on Probability
1) A multinational farm conducted a job satisfaction survey on a sample of its employees.
The table below summarizes the result of the survey. Assuming that the sample drawn is
a random sample from its entire employee population, the HR would like to know the
probability of the following events.

a) What proportion of employees is satisfied?

b) What proportion of employees is at a risk of attrition? (Assume a dissatisfied
employee will attrite eventually.)

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 c) If a dissatisfied employee attrite with probability 0.4 within a year, what is the
probability of an employee to attrite in a year?
d) If an employee is chosen randomly, what is the probability that he/she at least a
high school graduate?
e) What is the satisfaction rate among employees who are college graduate or more?
f) Among the employees who have at least some college education, what proportion
is not dissatisfied?
g) Among the employees who are not satisfied, what proportion are college graduate
or more?
h) Among the employees who have not had any college education, what proportion
are not highly dissatisfied?

Job Satisfaction  
Neutra Highly
Education Level Satisfied Dissatisfied Total
l Dissatisfied
Did not complete high school 10 20 30 40 100
High school graduate 20 30 25 50 125
Some college 30 60 35 25 150
College Graduate 120 40 30 10 200
Post-graduate 60 15 0 0 75
Total 240 165 120 125 650

2) A multinational bank is concerned about the waiting time of its customers before they
use the ATM for their transactions. A study of a random sample of 500 customers reveals
the following probability distribution.

Waiting time Probabilit

(in minutes) y
0 0.2
1 0.18
2 0.16
3 0.12
4 0.1
5 0.09
6 0.08
7 0.04
8 0.03

a) What is the probability that a customer will wait for more than 5 minutes?
b) What proportion of the customers do not have to wait at all?
c) What is the expected waiting time for a customer?

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Problems on Binomial and Normal Distributions

The trick is to identify which problem can be solved by applying binomial rule. For binomial
application you need to check if there are n trials, each trial results in a success or a failure and
probability of success is constant for each trial.

1) In an inspection of automobiles 60% of all automobiles had emissions that do not meet
the pollution requirement. For a random sample of 15 automobiles, compute the
following
a) Probability that all 15 fails the inspection
b) Exactly 8 fails the inspection
c) Seven or less passes the inspection
d) Expected number of automobiles to pass the inspection and its variance.

2) Over a long period of time in a large multinomial corporation, 10% of all sales trainees
are rated as outstanding, 75% are rated as excellent, 10% are rated as satisfactory and 5%
are considered unsatisfactory. Find the following probabilities for a sample of 10 trainees
selected at random
a) Two are rated as outstanding
b) Two or more are rated as outstanding
c) Eight of the ten are rated either outstanding or excellent
d) None of the trainees are rated as unsatisfactory

3) A labor union’s examining board for the selection of trainees has a record of admitting
70% of all applicants who meet a basic set of criteria. Five members of a minority group
recently came before the board and four of five were rejected. Find the probability that
one or fewer would be accepted if the record is really 0.7. Did the board apply a lower
probability of acceptance when reviewing the five members of the minority group?

4) According to the Telecommunication Industry the average monthly cell phone bill is Rs.
850 with a standard deviation of Rs. 150.

a) What is the probability that a randomly selected cell phone bill is more than
Rs 1200?

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 b) What is the probability that a randomly selected cell phone bill is between Rs
750 and Rs 1200?
c) What is the probability that a randomly selected cell phone bill is no more
than Rs 650?
d) What is the amount above which lies top 15% of cell phone bills?
e) What is the amount below which lies bottom 25% of cell phone bills?

5) For on-campus recruitment Ms. Z has sat for tests by Company A and Company B. For both tests
her score is 50. It is known that for Company A, scores have a normal distribution with mean 40
and standard deviation 15 whereas for Company B, scores have a normal distribution with mean
45 and standard deviation 10. Relatively speaking in which test has Ms. Z done better?

Problems on Central Limit Theorem

1) On an average Make My Trip gets 5000 queries a day with a standard deviation of 500.
a) Assuming a month contains 30 days, on what proportion of days a month will there be
more than 5250 queries?
b) Assuming a month contains 30 days, data is collected on 25 months and an average of 25
months is computed. What is the probability that average of 25 months is more than
5250?

2) A survey was conducted with graduates from the top 30 MBA programs. On the basis of the
survey assume that the mean annual salary for male and female graduates 10 years after
graduation is US$168,000 and US$117,000 respectively. Assume the standard deviation for the
male graduates is US$40,000 and for the female graduates US$25,000.
a) What is the probability that a random sample of 40 male graduates will provide a sample
mean within US$10,000 of the population mean?
b) What is the probability that a random sample of 40 female graduates will provide a
sample mean within US$10,000 of the population mean?
c) In which of the preceding two cases, do we have a higher probability of obtaining a
sample estimate within US$10,000 of the population mean? Why?
d) What is the probability that a sample of 100 male graduates will provide a sample mean
more than US$4000 below the population mean?