Exercises

1. A quality control inspector has rated each batch produced today on a scale from A
through E, where A represents the best quality and E is the worst.
a. Is this variable quantitative or qualitative?
b. Is this variable ordinal, nominal, or neither?

2. Classify each of the following as nominal, ordinal, interval, or ratio data.

a. The time required to produce each tire on an assembly line
b. The number of quarts of milk a family drinks in a month
c. The ranking of four machines in your plant after they have been designated as
excellent, good, satisfactory, and poor
d. The telephone area code of clients in the United States
e. The age of each of your employees
f. The dollar sales at the local pizza shop each month
g. An employee’s identification number h. The response time of an emergency unit

3. The annual imports of a selected group of electronic suppliers are shown in the
following frequency distribution.
Imports (Rs millions) Number of Suppliers
2 up to 5 6
5 up to 8 13
8 up to 11 20
11 up to 14 10
14 up to 17 1

(a) Portray the imports as a histogram.

(b) Portray the imports as a relative frequency polygon.
(c) Summarize the important facets of the distribution (such as classes with the highest
and lowest frequencies).

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4. A factory pays workers on piece rate basis and also a bonus to each worker on the
basis of individual output in each quarter. The rate of bonus payable is as follows.

Output in units Bonus in rupees

70-74 40
75-79 45
80-84 50
85-89 60
90-94 70
95-99 80
100-104 100

The individual output of a batch of 50 workers is given below.

94 83 78 76 88 86 93 80 91 82 89 97 92 84 82 80 85 83 98 103
87 88 88 81 95 86 99 81 87 90 84 97 80 75 93 101 82 82 89 72
85 83 75 72 83 98 77 87 71 81

After suitable classification you are required to find:

a. Average bonus per worker for the quarter.
b. Total quarterly bonus paid to the whole batch
c. Average output per worker.

5. The following is the age distribution of 2000 persons working in a large textile mill.

Age group No. of persons

15-20 80
20-25 250
25-30 300
30-35 325
35-40 287
40-45 220
45-50 268
50-55 150
55-60 75
60-65 25
65-70 20

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Because of the heavy losses the management has decided to bring down the strength to
40% of the present number according to the following scheme.

a. To retrench the first 10% from lower group

b. To absorb the next 40% in other branches
c. To make 10% from the highest age group retire prematurely.

What will be the age limit of persons retained in the mill and of those transferred to other
branches? Also calculate the average age of those retained.

6. The following data represent the total fat for burgers and chicken items from a sample
of fast-food chains.

BURGERS
21 31 39 35 39 34 43

CHICKEN
7 16 15 16 9 18 22 39 27 33 32

a) Place the data for burgers and chicken in to two ordered arrays.
b) Construct stem-and-leaf displays for burgers and chicken.
c) Does the ordered array or the stem-and-leaf display provide more information?
Discuss.
d) Compare the burgers and chicken items in terms of the total fat. What conclusions
can you make?

7. Suppose you are an investor in the Stock Market and evaluating an investment in two
companies of Alpha company and Beta company. Returns of these companies for the
past ten years are given below.

Year Alpha Return Beta Return

( %) (%)

2015 12 12
2016 13 15
2017 24 29
2018 13 -12
2019 6 6
2020 18 15
2021 32 30
2022 -5 23
2023 21 18
2024 18 27

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 a. Calculate the average rate of return for each stock during the 08 year period.

b. Calculate the standard deviation of returns for each stock.

c. Calculate the coefficient of variation for each stock.

d. If you are a risk-averse investor, would you prefer to hold Stock Alpha or Stock
Beta? Why?

8. A bank branch located in a commercial district of a city has the business objective of
developing an improved process for serving customers during the noon-to-1:00 P.M.
lunch period. The waiting time, in minutes, is defined as the time the customer enters
the line to when he or she reaches the teller window. Data are collected from a sample
of 15 customers during this hour. The file contains the results, which are also listed
here:

4.21 5.55 3.02 5.13 4.77 2.34 3.54 3.20

4.50 6.10 0.38 5.12 6.46 6.19 3.79

a. Compute the mean and median.

b. Compute the variance, standard deviation, range, coefficient of variation, and Z
scores. Are there any outliers? Explain.
c. Are the data skewed? If so, how?
d. As a customer walks into the branch office during the lunch hour, she asks the
branch manager how long she can expect to wait. The branch manager replies,
“Almost certainly less than five minutes.” On the basis of the results of (a) through (c),
evaluate the accuracy of this statement.

9. The distribution of dividend declared by 77 companies is given in the following table.

Percentage of dividend Number of Companies

declared
0-10 6
10-20 8
20-30 23
30-40 18
40-50 14
50-60 6
60-70 2
Total 77

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 a. Calculate the mean, standard deviation, coefficient of variation of this
distribution.
b. If the distribution is roughly bell-shaped, between what percentage of
dividends declared would you expect to find 95% of the companies?

10. The board of directors of Gothic Products is considering acquiring one of two
companies and is closely examining the management of each company in regard to
their inclinations toward risk. During the past five years, the first company’s returns
on investments had an average of 28.0 percent and a standard deviation of 5.3
percent. The second company’s returns on investments had an average of 37.8
percent and a standard deviation of 4.8 percent. If we consider risk to be associated
with greater relative dispersion, which of these two companies has pursued a riskier
strategy?

11. A consultant is interested in seeing how accurately a new job-performance index

measures what is important for a corporation. One way to check is to look at the
relationship between the job-evaluation index and employee’s salary. A sample of
eight employees was taken, and information about salary and job performance index
was collected.
Job performance index(X) 9 7 8 4 7 5 5 6
(Out of ten)

Salary (Y) 36 25 33 15 28 19 20 22
(in thousands)
a. Draw a scatter diagram for the above data.
b. Calculate the covariance and interpret its value.
c. Calculate the sample correlation coefficient and interpret its value.