Statistics for Management Unit 9

Unit 9 A – Testing of Hypothesis –

Large Samples
Structure:
9.1 Introduction – Large Samples
Objectives
9.2 Two Tailed Tests and One Tailed Tests
Self Assessment Questions 1
Self Assessment Questions 2
9.3 Examples
9.4 Summary
9.5 Terminal Questions
9.6 Answer to SAQ’s and TQ’s
B-Testing of Hypothesis – Small Samples
9.7 Introduction – Small Samples
9.8 T- Distribution
9.9 Examples
Self Assessment Questions 3
9.10 Summary
9.11 Terminal Questions
9.12 Answer to SAQ’s and TQ’s

9.1 Introduction – Large Samples

Hypothesis testing begins with an assumption, called a hypothesis, that we
make about a population parameter. We assume a certain value for a
population mean. To test the validity of our assumption, we gather sample
data and determine the difference between the hypothesized value and the
actual value of the sample mean. Then we judge whether the difference is
significant. The smaller the difference, the greater the likelihood that our
hypothesized value for the mean is correct. The larger the difference, the
smaller the likelihood.
Unfortunately, the difference between the hypothesized population
parameter and the actual statistic is more often neither so large that we
automatically reject our hypothesis nor so small that we just as quickly
accept it. So in hypothesis testing, as in most significant real-life decisions,
clear-cut solutions are the exception, not the rule.

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Learning Objectives:
In this unit students will learn about
1. Basic concepts in Hypothesis testing
2. The different test statistics available
3. To identify the test for a given problem
Assumptions: Although hypothesis testing sounds like some formal
statistical term completely unrelated to business decision making, in fact
managers propose and test hypothesis all the time. “if we drop the price of
this car model by Rs.1,500, we’ll sell 50,000 cars this year” is a hypothesis.
To test this hypothesis, we have to wait until the end of the year and count
sales. Managerial hypothesis are based on intuition; the marketplace
decides whether the manager’s intuitions were correct. Hint: Hypothesis
testing is about making inferences about a population from only a small
sample. The bottom line in hypothesis testing is when we ask ourselves
(and then decide) whether a population, like we think this one, is would be
likely to produce a sample like the one we are looking at.
Testing Hypothesis
Null and Alternate hypothesis
In hypothesis testing, we must state the assumed or hypothesized value of
the population parameter before we begin sampling. The assumption we
wish to test is called the null hypothesis and is symbolized by Ho.
Suppose we want to test the hypothesis that the population mean is equal to
500. We would symbolize it as follows and read it, “The null hypothesis is
that the population mean = 500 written as Ho:  = 500. The term null
hypothesis arises from earlier agricultural and medical applications of
statistics. In order to test the effectiveness of a new fertilizer or drug, the
tested hypothesis (the null hypothesis) was that it had no effect, that is,
there was no difference between treated and untreated samples.
If we use a hypothesized value of a population mean in a problem, we would
represent it symbolically as H0.
This is read. “The hypothesized value of the population mean.”
If our sample results fail to support the null hypothesis, we must conclude
that something else is true. Whenever we reject the hypothesis, the

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conclusion we do accept is called the alternative hypothesis and is

symbolized H1 (“H sub-one”). For the null hypothesis H0:  = 200
We will consider three alternative hypothesis as:
H1:   200 (population mean is not equal to 200)
H1:  > 200 (population mean greater than 200)
H1:  < 200 (population mean less than 200)
Interpreting the level of significance
The purpose of hypothesis testing is not to question the computed value of
the sample statistic but to make a judgment about the difference between
that sample statistic and a hypothesized population parameter. The next
step after stating the null and alternative hypotheses, then, is to decide what
criterion to use for deciding whether to accept or reject the null hypothesis.
If we assume the hypothesis is correct, then the significance level will
indicate the percentage of sample means that is outside certain limits. (In
estimation, please remember, the confidence level indicated the percentage
of sample means that fell within the defined confidence limits.
Hypothesis are accepted and not proved:
Even if our sample statistic does fall in the non-shaded region (the region
that makes up 95 percent of the area under the curve), this does not prove
that our null hypothesis (H0) is true; it simply does not provide statistical
evidence to reject it. Why? Because the only way in which the hypothesis
can be accepted with certainty is for us to know the population parameter;
unfortunately, this is not possible. Therefore, whenever we say that we
accept the null hypothesis, we actually mean that there is not sufficient
statistical evidence to reject it. Use of the term accept, instead of do not
reject, has become standard. It means simply that when sample data do not
cause us to reject a null hypothesis, we behave as if that hypothesis is true.

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Selecting a significance level

There is no single standard or universal level of significance for testing
hypotheses. In some instances, a 5 % level of significance is used.
Published research results often test hypotheses at the 1 percent level of
significance. It is possible to test a hypothesis at any level of significance.
But remember that our choice of the minimum standard for an acceptable
probability, or the significance level, is also the risk we assume of rejecting a
null hypothesis when it is true. The higher the significance level we use for
testing a hypothesis, the higher the probability of rejecting a null hypothesis
when it is true. 5% level of significance implies we are ready to reject a true
hypothesis in 5% of cases.
If the significance level is high then we would rarely accept the null
hypothesis when it is not true but, at the same time, often reject it when it is
true.
When testing a hypothesis we come across with four possible situations
depicted as follows.

Hypothesis is
True False

Test results says Accept  

Reject  

Type I error

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The combination are:

1. Hypothesis is a true, test result accepts it – we have made a right
decision.
2. Hypothesis is a true, test result rejects it – we have made a wrong
decision (Type I error). It is also known as Consumer’s Risk, denoted
by 
3. Hypothesis is False, test result accepts it – we have made a wrong
decision (Type II error). It is known as Producer’s Risk, denoted by
 1 – P is called power of the Test.
4. Hypothesis is False, test result rejects it – we have made a right
decision.
When Type I error is preferred
Suppose that making a Type I error (rejecting a null hypothesis when it is
true) involves the time and trouble of reworking a batch of chemicals that
should have been accepted. At the same time, making a Type II error
(accepting a null hypothesis when it is false) means taking a chance that an
entire group of users of this chemical compound will be poisoned.
Obviously, the management of this company will prefer a Type I error to a
Type II error and, as a result, will set very high levels of significance in its
testing to get low  s.
When Type II error is preferred
Suppose, on the other hand, that making a Type I error involves
disassembling an entire engine at the factory, but making a Type II error
involves relatively inexpensive warranty repairs by the dealers. Then the
manufacturer is more likely to prefer a Type II error and will set lower
significance levels in its testing.
Decide on which distribution to use in Hypothesis testing
After deciding what level of significance to use, our next task in hypothesis
testing is to determine the appropriate probability distribution. We have a
choice between the normal distribution, and the t distribution. The rules for
choosing the appropriate distribution are similar to those we encountered in
the unit on estimation. The Table below summarizes when to use the normal
and t distributions in making tests of means. Later in this unit, we shall
examine the distributions appropriate for testing hypotheses about
proportions.

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Remember one more rule when testing the hypothesized values of a mean.
As in estimation, use the finite population multiplier whenever the population
is finite in size, sampling is done without replacement, and the sample is
more than 5 percent of the population.

Conditions for using the Normal and t distributions in

Testing Hypothesis about means

When the Population When the Population Standard

Standard Deviation is Deviation is not known
known

Sample size n is larger than 30 Normal distribution, Normal distribution, z - table

z – table

Sample size n is 30 or less and Normal distribution, t Distribution, t - table

we assume the population is z – table
normal or approximately so

9.2 Two – tailed tests and One – Tailed tests

Two Tailed Tests:
A two-tailed test of a hypothesis will reject the null hypothesis if the sample
mean is significantly higher than or lower than the hypothesized population
mean. Thus, in a two-tailed test, there are two rejection regions. This is
shown in figure 1 of 9.12.
A two-tailed test is appropriate when the null hypothesis is  = Ho (where
Ho is some specified value) and the alternative hypothesis is   Ho.
Example 1: Assume that a manufacturer of light bulbs wants to produce
bulbs with a mean life of  = Ho = 1,000 hours. If the lifetime is shorter, he
will lose customers to his competitions; if the lifetime is longer, he will have a
very high production cost because the filaments will be excessively thick. In
order to see whether his production process is working properly, he takes a
sample of the output to test the hypothesis Ho;  = 1,000. Because he does
not want to deviate significantly from 1,000 hours in either direction, the
appropriate alternative hypothesis is H1:   1,000, and he uses a two-tailed
test. That is, he rejects the null hypothesis if the mean life of bulbs in the
sample is either too far above 1,000 hours or too far below 1,000 hours.

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However, there are situations in which a two-tailed test is not appropriate,

and we must use a one-tailed test.
Example 2: Consider the case of a wholesaler that buys light bulbs from
the manufacturer discussed earlier. The wholesaler buys bulbs in large lots
and does not want to accept a lot of bulbs unless their mean life is at least
1,000 hours or a minimum of 1,000 hours. As each shipment arrives, the
wholesaler tests a sample to decide whether it should accept the shipment.
The company will reject the shipment only if it feels that the mean life is
below 1,000 hours. If it fells that the bulbs are better than expected (with a
mean life above, 1,000 hours), it certainly will not reject the shipment
because the longer life comes at no extra cost. So the wholesaler’s
hypotheses are Ho:  = 1,000 and H1:  < 1,000 hours. It rejects Ho only if
the mean life of the sampled bulbs is significantly below 1,000 hours. This
situation is illustrated in the figure below. From this figure, we can see why
this test is called a left-tailed test (or a lower-tailed test).

In general, a left tailed (lower-tailed) test is used if the hypotheses are

Ho:  = Ho. In such a situation, it is sample evidence with the sample mean
significantly below the hypothesized population mean that leads us to reject
the null hypothesis in favor of the alternative hypothesis. Stated differently,
the rejection region is in the lower tail (left tail) of the distribution of the
sample mean, and that is why we call this a lower-tailed test.

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A left-tailed test is one of two kinds of one-tailed tests. As you have probably
guessed by now, the other kind of one-tailed test is a right-tailed test (or an
upper-tailed test). An upper-tailed test is used when the hypotheses are
Ho:  > Ho. Only values of the sample mean that are significantly above the
hypothesized population mean will cause us to reject the null hypothesis in
favor of the alternative hypothesis. This is called an upper-tailed test
because the rejection region is in the upper tail of the distribution of the
sample mean.

This is to remind you again that, in each example of hypothesis testing,

when we accept a null hypothesis on the basis of sample information, we
are really saying that there is no statistical evidence to reject it. We are not
saying that the null hypothesis is true. The only way to prove a null
hypothesis is to know the population parameter, and that is not possible with
sampling. Thus, we accept the null hypothesis and behave as if it is true
simply because we can find no evidence to reject it.
Self Assessment Questions 1
1. For the following cases; specify which probability distribution to use in
hypothesis testing:
1. Ho:  = 27, H1:   27, x = 33, sample  = 4, n = 25
2. Ho:  = 98.6, H1:  > 98.6, x = 99.1,  = 1.5, n = 50
3. Ho:  = 3.5, H1:  < 3.5, x = 2.8, sample  = 0.6, n = 18
4. Ho:  = 382, H1:   382, x = 363, sample  = 68, n = 12
5. Ho:  = 57, H1:  > 57, x = 65, sample  = 12, n = 42
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Classification of Test Statistics

Statistics used for Testing of Hypothesis can be classified as follows
A Large Samples (n > 30) – Attributes (proportions)

Test Descriptio Test Statistics Notes

No. n of Test
1 Test for P  Ps P – Population proportion
specified Z 1/ 2 Ps = Sample proportion
 PQ 
proportion   Q = 1 – P, n sample size
– infinite  n 
population
2 Test for P  Ps P = Population proportion
specified Z 1/ 2 1/ 2 Ps = Sample
 PQ  Nn
proportion     Q = 1 –P, n – Sample
– Finite  n   N 1
size
Population
N - Population size
3 Test P  Ps P1 -first sample proportion
between Z 1/ 2 1/ 2 P2 -second sample
 P1Q1  P Q 
proportions     2 2  proportion
– different  n1   n2 
Q1 = 1 – P, Q2 = 1-P2
Population
n1- first sample size
n2 – second sample size
4 Test P  Ps P1 -first sample proportion
between Z
PQ 1/ n1  1/ n 2 1 / 2
P2 -second sample
proportion proportion
– same
Q1 = 1 – P, Q2 = 1-P2
population
n1- first sample size
n2 – second sample size

B Large Samples – n > 30: Variable

Test Description Test Statistics Notes
No. of Test
5 Test for    s  – Population mean
specified Z
 s = Sample mean
mean –
infinite n  = Population S.D

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population We can use Sample

S.D
(s) also in case
population S.D. is not
given
6 Test for  – Population mean
specified    s s = Sample mean
mean – Finite Z 1/ 2 1/ 2
 Nn  = Population S.D
Population    
n  N 1 We can use Sample
S.D
(s) also in case
population S.D. is not
given
7 Test between    s P1 -first sample
means – Z 1/ 2 1/ 2 proportion
 12   2 
different    2  P2 -second sample
Population  n1   n2 
    proportion
Q1 = 1 – P1, Q2 = 1-P2
n1- first sample size
n2 – second sample
size
8 Test between    s Where
Mean – same Z 1/ 2
 1/ n1  1/ n 2  n  2  n22 2 
population  1 1 
 1/ n1  1/ n 2 
 

Test Procedure
Step 1 : State Null hypothesis (Ho) and alternate hypothesis (H1)
Step 2 : State the level of significance. This gives you the tabulated
normal/ t – value
Step 3 : Select the appropriate test from the list given in 9.2 and next
chapter 10
Step 4 : Calculate the required values for the test
Step 5 : Conduct the test

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Step 6 : Draw conclusion

If calculated value is < Tabulated Value accept Ho
If calculated value is > Tabulated Value Reject Ho
How to identify the right statistics for the test.
Step 1: Check the sample size. If n > 30 it is large sample Test. If n  30
it is small sample test (will be discussed in unit 10).
Step 2: Check whether the data is attribute or variable. If the words mean
and S.D are used, then it is test for variable, other wise it is test for
attribute.
Step 3: Check whether it is a test for specified value or between values. If
two sample sizes are given, then it is between values, otherwise it
is for specified value.
Step 4: If it is specified value test, check whether sample belongs to infinite
or finite population. If it is between values test, check whether
samples are from different population or same population.
Step 5: Select the appropriate test statistic.
Step 6: If the words improved, more, higher, less, lower, effective, efficient,
superior, inferior etc used then it is one-tailed test, otherwise it is
two tailed test.
Self Assessment Questions 2
State True / False
i) Null hypothesis states that there is significant differences between
observed and hypothetical values
ii) 1% level of significance means we are ready to reject a true
hypothesis in 99% of cases.
iii) If the Null hypothesis Ho:  = s then it is two-tailed test.
iv) If the calculated value of a statistic is less than tabulated value of the
statistics, then Ho is accepted.
v) 1 -  is called power of the test
vi) if n1 = 300, n2 = 500, 1 = 50, 2 = 60, 1 = 10, 2 = 12 results of two
samples taken from two cities A and B then we test for between
means under different population
vii) If n > 30, then we do not apply z test unless population S.D is known

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9.3 Examples:
Example 1: Thompson press hypotheses that the average life of its latest
web-offset press is 14,500 hours. They know the SD of the press life is
2,100 hours. From a sample of 25 presses, the company finds a sample
mean of 13,000 hours. At 0.01 significance level, should the company
conclude that the average life of the presses is less than the hypothesized
14,500 hours?
1. Null hypothesis Ho:  = 14,500
Alternate hypothesis HA: M < 14,500 (one-tailed test)
2. Level of significance  = 0.01  Ztab = 2.33
3. Test Statistics
   s 
Z

n
4. Given  = 14,500, s = 13,000,  = 2,100, n = 25
Note: Although n < 25, population S.D is given, therefore it becomes Z
test
 2100 2100
    420
n 25 5

5. Test
13000  14500 
Z cal   3.57
420
6. Conclusion
Since Zcal (3.57) > Ztab (2.33) Ho is rejected
 The average life of the press is less than 14,500 hours.
Example 2: Theater owners in India know that a hit movie ran for an
average of 84 days with a standard deviation of 10 days in each city the
movie was screened. A particular movie distributor was interested in
comparing the popularity of movie in his region with that of the population.
He randomly chose 75 theatres at random in the region and found a popular
movie ran for 81.5 days.

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a. State appropriate hypotheses for testing whether there was significant

difference between theatres in the distributor’s region and the
population.
b. At a 1% significance level, test these hypotheses.
1. Null hypothesis Ho:  = 84 where  = 84
Alternate hypothesis HA:   84 (two-tailed test)
2. Level of significance 1%  Ztab = 2.58
3. Test Statistics
   s
Z

n
4. Given  = 84, s = 81.5,  = 10, n = 75
 10
   1.1547
n 15

5. Test
84  81.5
Z cal   2.165
1.1547
6. Conclusion
Since Zcal (2.165) < Ztab (2.58) Ho is accepted
Example 3: A ketchup manufacturer is in the process of deciding whether to
produce a new extra spicy brand of ketchup. The company’s market
research team found in a survey of 6000 households that 355 households
would buy the extra spicy brand. In an earlier more extensive study carried
out 2 years ago showed that 5% of the house holds would buy the brand
then. At 2 % level of significance, should the company conclude that there
is an increased interest in the extra spicy flavour?
1. Null hypothesis Ho: P = Ps
Alternate hypothesis HA: P < Ps (one-tailed test)
2. Level of significance 2 %  Ztab = 2.05
3. Test Statistics
P  Ps 
Z
1/ 2
 PQ 
 
 n 
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4. Given P = 0.05, Ps = 355 / 6000, = 0.05513, n = 6000, Q = 1 – P = 0.95

1/ 2
 0.05  0.95 
 PQ / n 1/ 2
   0.0028
 6000 
5. Test
0.05  0.05583 
Z cal   2.08
0.0028
6. Conclusion
Since Zcal (2.08) > Ztab (2.05) Ho is rejected
Example 4: Microsoft estimated 10,000 potential software buyers 35%
planning to wait to purchase the new OS Windows Vista, until an upgrade
has been released. After an advertising campaign to reassure the public,
Microsoft surveyed 3000 buyers and found 950 who are still skeptical. At 5%
level of significance can the company conclude that the population of
skeptical people had decreased? (Null hypothesis is rejected. Use z
distribution).
1. Null hypothesis Ho: P0 = Ps
Alternate hypothesis HA: P0 > Ps
2. Level of significance 5%  Ztab = 1.645
3. Test Statistics
P  Ps
Z
1/ 2 1/ 2
 PQ  Nn
   
 n   N  1
4. Given Ps = 950 / 3000 = 19 / 60 = 0.317, P = 0.35, Q = 0.65, n = 10,000,
n = 3000
1/ 2 1/ 2
 0.35  0.65   10000  3000 
   
 3000   10000  1 
5. Test
0.317  0.65
Z cal   4.52
.0073
6. Conclusion
Since Zcal (4.52) > Ztab (1.645) Ho is rejected
 Proportion of Sceptical people has significantly decrease.

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Example 5: A machine is designed so as to back 200 ml of a medicine with

a standard deviation of 5ml. A sample of 100 bottles. When measured had
a mean content of 201.3ml Test whether the machine is functioning properly
use 5% level of significance.
1. Null hypothesis Ho:  = s
Alternate hypothesis HA:   s (two-tailed test)
2. Level of significance 5% implies Ztab = 1.96
3. Test Statistics
   s 
Z

n
4. Given  = 200, s = 201.3,  = 5, n = 100
 5
   0.5
n 100
5. Test
200  201.3
Z cal   13 / 5  2.60
0.5
6. Conclusion
Since Zcal (2.60) > Ztab (1.96) Ho is rejected  The machine is not
functioning properly.

9.4 Summary
In this chapter, we have defined what is meant by hypothesis and sent the
procedure for testing of hypothesis. We have defined what is meant by
significance level and types of errors. We have also seen different types of
tests, two tailed and one tailed and the circumstance these tests are done
and the steps involved in identifying the test.

9.5 Terminal Questions

1. 20 household out of 1000 were using Brand A toothpaste. The company
increased the price of the brand. In a survey they found that only 12
households out of 1000 are using it now. Can we conclude at 5% level
of significance that proportion of users has decreased?

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2. A drill drills holes with standard deviation of depth 0.03 cms. It is

adjusted to drill holes of depth 5.5 cm. For 50 holes drilled, the mean
depth is 5.503 cm. Test at 5% level of significance whether the
adjustment is correct.
3. Out of 80 batteries produced by a process I, 3 were found to be
defective. Another sample of 130 produced by process II, 2 were found
to be defective. Test whether the proportion of defectives in two process
differ, using 1% level of significance.
4. The following data relate to mean weight of a product. Test whether
there is a significant difference in means of the plants.

Plant A Plant B
Size 300 200
Mean 75.4 74.3
Variance 65.6 57.8

5. A machine is set to produce a particular characteristics with mean 21.3

and S.D 0.4. A random sample of 625 observation has 21.33 as mean.
test whether the sample mean differ significantly from population mean
6. Out 10,000 pumpkins harvested 1000 were randomly selected. 8% were
found to be rotten. The grower claims that only 7% are rotten. In his
claim tenable? Test at 5% level of significance?

9.6 Answers to SAQs and TQs

Self Assessment Questions 1
1. Normal distribution
2. Normal distribution
3. Normal distribution
4. Normal distribution
5. Normal distribution
Self Assessment Questions 2
1. i) False ii) False iii) True iv) True v) True vi)True vii)True

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Answers to Terminal Questions

1. Zcal = 1.9457 Ho accept
2. Zcal = 0.71 Ho accepted
3. Zcal = 0.5 Ho accepted
4. Zcal = 1.54 Ho accepted
5. Zcal = 18.75 Ho rejected
6. Zcal = 1.30 Ho accepted
B - Testing of Hypothesis – Small Samples

9.7 Introduction – Small Samples

In the last unit we learned Testing of hypothesis when sample size is large
using normal distribution. However if the sample size is small, then the
distribution of the statistics are far from normal and hence normal test
cannot be applied. Hence to deal with small samples tests of significance
known as Exact Sample Tests have been developed. For all practical
purposes the sample is termed as small if n  30. The basic fundamental
assumption in all Exact sample test are i) the parent population from which
sample is drawn is normally distributed ii) Sample / Samples is / are drawn
at random. And iii) They are independent of each other.
It should be noted that the methods and theory of small samples are
applicable to large samples, but the reverse is not true.

9.8 “t” – Distribution

The “t” – Distribution was developed by W.S.Goosett in the pet name
student. Therefore it is known as student’s “t” – Distribution. The properties
of “t” – Distribution are
It is a continuous probability distribution

“t” Statistic is defined as

( X  )
f (t)   n
S
1/ 2
 ( x  x ) 2 
Where S 
 n  1 

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The probability density function is

v  1/ 2
 t2 
f ( t )  C 1  
 v 

Where C = Constant required to make the area under the curve equal to
unity.
 = n – 1, Degree of Freedom.
 The value of t ranges from -  to + 
 “” is called the parameter of the distribution
 It is symmetrical about mean
 Its mean is zero
 Variance of the distribution is greater than one.
 It has larger areas at the tails compared to normal distribution and lower
height at the mean.
 It tends to a normal distribution as n  .
Uses:
 It is used to test a specified value.
 It is used to test the differences between values (independent sample).
 It is used as a paired “t” – test (dependent sample)
 It is used to construct confidence interval for the estimates.
Small Samples – Variable: Population S.D is not known.
Te Description of Test Statistics Notes
st Test
No.
1 Test for specified  X   X – Population proportion
Value – Infinite t
S  = Population mean
population D.O.F
n 2
n -1 ( x  X )
S 
2
n 1
2 Test for specified  X   N - Population size
Value – Finite t 1/ 2
S N  n
population latin  
D.O.F n-1 n  N  1 

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3 Test between X -first sample mean

values – Y -second sample mean
independent
X  Y  2
samples tS ( x  X ) ( Y  Y ) 2
1/ n1  1/ n 2 
1/ 2
S2 
n1  n 2  2
D.O.F n1 + n2 - 2

n S  n2S 2
2 2
S  1 1
2
n1  n 2  2
4 Paired “t – test d d – Mean of difference
(Dependent t
Sd
samples) ( x  X) 2
n Sd 2 
D.O.F n -1 n 1
N – sample size

9.9 Examples
Example 1: A random sample of 10 bags of fertilizer are found to have the
following weight (kg) 45, 49, 50, 49, 44, 52, 48, 45, 46, 45
Test at 5% level of significance whether the average packing weight can be
taken as 50 kg.
Solution:
X D = X - 48 d2
45 -3 9
49 +1 1
50 2 4
49 +1 1
44 -4 16
52 4 16
48 0 0
45 -3 9
46 -2 4
45 -3 9
-7 69

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d
XA
n
7
 48   47.3
10
1/ 2
1  2 (  d) 2 
S  d  
n 1 n 
1/ 2
1  ( 7) 2 
 69  
9  10 
= 7.12
7. Null hypothesis Ho: X  
Alternate hypothesis HA: X   (Two tailed test)
8. Level of significance 5 % and D.O.F 9  ttab = 2.262
9. Test Statistics
 X  
t
S
n

10. Given X  47.3 ,  = 50, S = 7.12, S / n = 0.8438

11. Test
 47.3  50.0
t cal   3.2
0.8438
12. Conclusion
Since tcal (3.2) > ttab (2.262) Ho is rejected  The mean of the
population cannot be considered as 50 kg.
Example 2: Suppose in the above problem out of 1000 bags packed in a
day a random sample of 10 was selected and the readings were as given
above. Test whether the population average weight is 50 kg.
Solution:
1. Null hypothesis Ho: X  
Alternate hypothesis HA: X   (Two tailed test)

2. Level of significance 5 % and D.O.F 9  ttab = 2.262

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3. Test Statistics
 X  
t 
1/ 2
S N  n 
 
n  N  1

4. Given n = 10 N = 1000 X  47.3 S / n = 0.8438

1/ 2
N  n  S
    0.8362
 N  1 n

5. Test
 47.3  50.0
t cal   3.23
0.8362
6. Conclusion
Since tcal (3.23) > ttab (2.262) Ho is rejected.
Example 3: Average tensile strength of 9 samples of paper was found to
be 15.8 units and variance = 10.3. Can we say at 1 % level of significance
that it is a random sample drawn from a population whose mean tensile
strength is 17.5.
Solution:
1. Null hypothesis Ho: X  
Alternate hypothesis HA: X  
2. Level of significance 1 % and D.O.F 8  ttab = 3.36
3. Test Statistics
 X  
t
S
n 1
4. Given X  15.8  = 17.5 S2 = 10.3 n=8
S 10.3
   1.135
n 8
5. Test
15.8  17.5
t cal   1.498
1.135
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6. Conclusion
Since tcal (1.498) < ttab (3.36) Ho is accepted  It can be considered as a
random sample.
Example 4: Treatment A gave brightness index for a substance on “5 “
randomly selected samples as 60, 41, 38, 39, 42. Treatment B gave the
same index on another 7 randomly selected samples as 56, 42, 48, 69, 68,
64, 69, 62. At 5% level of significance can we conclude that Treatment “B”
increases the brightness?
We have
Solution:
1. Null hypothesis Ho: X1  X 2

2. Alternate hypothesis HA: X  Y (one tailed test)

3. Level of significance 5 % and D.O.F 5 + 7 – 2 = 10  ttab = 2.228

4. Test Statistics
X1  X 2
S 1/ n1  1/ n 2
5. Given
For Treatment “A”
For Treatment “B”
2
X d = X - 48 d
2
X d = X - 48 d 56 -1 1
60 +14 196 42 -15 225
41 -5 25 48 -19 361

48 -2 4 69 12 144
68 11 121
39 -7 49
64 7 49
42 -4 16
69 12 144
230 0 290
62 5 25
399 0 926

 S2 
n1 
1
n2  2

( X1  X1 ) 2  ( X 2  X 2 ) 2 

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
1
290  926  121.6
10
 S  121.6  S 1/ 5  1/ 7  11.03  0.3429  3.782

Solution:
5. Test
 46  57 11.0
t cal    1.7
121.6 (1/ 5  1/ 7) 1/ 2 6.457
6. Conclusion
Since tcal (1.7) < ttab (2.26), Ho is accepted
Treatment B is not superior to A.
Example 5:
A sales manger wants to know whether a special promotional campaign is a
success. He had the following data. Test at 5 % L.O.S whether it is a
success?
Retail Outlets 1 2 3 4 5 6
Sales before campaign 50 48 31 42 28 53
Sales after campaign 56 55 30 45 29 58
Solution:
We have
2
Before After d = After - Before d
Campaign
50 56 6 36
48 55 7 49
31 30 -1 1
42 45 3 9
28 29 1 1
53 58 5 25
21 121

 d 21
d    3.5
n 6

Sd 2 
1
n 1

 d2  (  d) 2 / n 

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 1/ 5 121  441 / 6  9.5

Sd 9.5
   1.5833  1.2583
n n

1. Null hypothesis Ho: d  0

Alternate hypothesis H1: d  0 (one tailed test)

2. Level of significance 5 % and D.O.F 5  ttab = 2.02

3. Test Statistics
 d
t
Sd
n
4. Test
3.5
t cal   2.782
1.2583
5. Conclusion
Since tcal (2.78) < ttab (2.02) Ho is rejected
There is a significance success due to campaign.
Self Assessment Questions-3
1. “t” distribution is __________ probability distribution.
2. “t” distribution’s parameter is __________.
3. “t” distribution has ___________ areas at the tail than normal
distribution.
4. The mean and variance of the “t” distribution are ________ and
________.

9.10 Summary
In this unit we discussed the four tests available for small samples. These
tests can be used for sample size (n  30) and samples whose population
S.D are not known. The different tests are illustrated with examples.

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Error

Statistics for Management Unit 9

9.11 Terminal Questions

1. A group of seven – week – old chickens reared on a high protein diet
weigh 12, 15, 11, 16, 14, 14 and 16 ounces. Another group 5 chicken
received low protein diet and weigh 8, 10, 14, 10, and 13. Test whether
there is significant increase in weight due to high protein use 5% level of
significance.
2. Strength tested pm two yarns gave the following results.
Sample Size Mean Sample Variance
Type A 4 52 42
Type B 9 42 56

Is there a significant difference in the mean Test at 5 % level of

significance.
3. The following results relate to the memory capacity of 10 students
before and after training.
Roll No 1 2 3 4 5 6 7 8 9 10
Before Training 12 14 11 8 7 10 3 0 5 6
After Training 15 16 10 7 5 12 10 2 3 8

Test at 5% level of significance whether training is effective.

9.12 Answers to SAQs and TQs

1. Continuous
2. Degrees of freedom
3. Larger
4. Zero, greater than one
Answers to Terminal Questions
1. tcal = 2.397 : Ho is rejected
2. tcal = 2.21 : Ho is rejected
3. tcal = 1.365 : Ho is rejected

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