STATISTICS MB0040

Obtain the average daily wages and the standard deviation of wages of all workers in the two organisations
taken together. Which organization is more equitable in regard to wages? (Formula and Computation of
Combined Mean, Formula and Computation of Combined Standard deviation, Formula and Computation of
Coefficient of Variation, Interpretation)
Answer:
Let x1 , x2 , n1, n2, 1 , 2 respectively denote mean, no. of workers and standard deviation of A and B.
Then : x1 = 30 , x2 = 15, n1 = 10, n2 = 20 , 1= (25) = 5 , 2 = (100) = 10 (given)
So
Combined mean = x12 = (n1x1 + n2x2) / (n1 + n2)
= (30*10+15*20)/20+10
=20

Combined standard deviation = s12 = ((n1 1 + n2 2 + n1d1 + n2d2 ) / (n1 + n2)

= ((10*25+20*100+10*100 +20*25)/30
= (( 250+2000+1000+500/30
= (3750/30
= 2.04

d1 = x1 - x12
=30-20=10

d2 = x2 - x12
= -5
Coefficient of Variance Formula
Coefficient of Variation CV= Standard Deviation / Mean x 100
= (2.04) /20 x 100
=10.20

3 a. State the addition and multiplication rules of probability giving an example of each case.( (Stating the
addition rule of probability and an example, Stating the multiplication rule of probability and an example)
Answer.

a) Addition rule
The addition rule of probability states that:
i) If A and B are any two events then the probability of the occurrence of either A or B is given by:
= +
ii) If A and B are two mutually exclusive events then the probability of occurrence of either A or B is
given by:
= +
iii) If A, B and C are any three events then the probability of occurrence of either A or B or C is given
by:
C= ++C C C+ C
iv) If A1, A2, A3, An are n mutually exclusive and exhaustive events then the probability of
occurrence of at least one of them is given by:

P (A1n) = P(A1)+P (A2).P(An)

Multiplication rule
If A and B are two independent events then the probability of occurrence of A and B is given by:
=
b. In a bolt factory machines A, B, C manufacture 25, 35 and 40 percent of the total output. Of their
total output 5, 4 and 2 percent are defective respectively. A bolt is drawn at random and is found to
be defective. What are the probabilities that it was manufactured by machines A, B and C? (Applying
Bayes theorem and calculating the probabilities)
Solution. Let E1, E2, E3 be the events that a bolt selected at random is manufactured by the machines A, B, C
respectively and let E denote the event of its being defective. Now P(E1) = 0.25, P(E2) = 0.35, P(E3) = 0.40
The probability of drawing a defective bolt manufactured by machine A is P(E/E1) = 0.05.
Similarly we have
P(E/E2) = 0.04, P(E/E3) = 0.02

BAYES THEOREM:

Hence the probability that a defective bolt selected at random is manufactured by machine A is
given by

0.25 x 0.05
0.25 x 0.05 + 0.35 x 0.04 + 0.40 x 0.02
=

.013
0.013+0.014+0.008

=0.37

The probability that a defective bolt selected at random is manufactured by machine B is given by
=

0.35 x 0.04

0.25 x 0.05 + 0.35 x 0.04 + 0.40 x 0.02

= .014
.035
= 0.4
The probability that a defective bolt selected at random is manufactured by machine C is given by

0.40 x 0.02
0.25 x 0.05 + 0.35 x 0.04 + 0.40 x 0.02

= .008
.035
= 0.23

6 a. What is analysis of variance? What are the assumptions of the technique?

b. Three samples below have been obtained from normal populations with equal variances. Test the
hypothesis at 5% level that the population means are equal.
(Meaning of Analysis of Variance, Assumptions, Formulas/Calculation/Solution to the problem) 2, 1, 7
Answer:
Analysis of variance (ANOVA)

Analysis of variance (ANOVA) is a collection of statistical models used to analyze the differences between group
means and their associated procedures (such as variation among and between groups). In ANOVA setting, the
observed variance in a particular variable is partitioned into components attributable to different sources of variation. In
its simplest form, ANOVA provides a statistical test of whether or not the means of several groups are equal, and
therefore generalizes t-test to more than two groups.
It is a collection of statistical models used to analyze the differences between group means and their associated
procedures (such as "variation" among and between groups). In ANOVA setting, the observed variance in a particular
variable is partitioned into components attributable to different sources of variation. In its simplest form, ANOVA
provides a statistical test of whether or not the means of several groups are equal.
Assumptions for study of ANOVA
The underlying assumptions for the study of ANOVA are:
i) Each of the samples is a simple random sample
ii) Population from which the samples are selected are normally distributed
iii) Each of the samples is independent of the other samples
iv) Each of the population has the same variation and identical means
v) The effect of various components are additive
b) Answer: Let H0: There is no significant difference in the means of three samples

8
10
7
14
11

7
5
10
9
9

12
9
13
12
14

A = 50

B = 40

C = 60

T= Sum of all observations = 150

T

Correction factor =

150 2
=

= 1500

15
T

SST (Total Sum of the Squares)= Sum of squares of all observations

2

= 8 + 7 +12 +10

(A )

( B )

+ .......... +14 -1500 =1600 -1500 = 100

( C)

n1

+
5

n3

40 2

( D

( N

- 1500 = 1540 -1500 = 40

5

+,,,,,,+
n4

60 2
+

n2
50 2

nn

Sum of the squares of the Error within columns (samples): SSE = SST SSC = 100 40 = 60
Variance between samples:

MSC =

SSC

40

(k-1)

= (3 -1)

40
= 2 = 20

Variance within the samples:

SSE
MSE =

(n - k)

60
= (15 - 3)

=5

The degree of freedom = (k 1, n k) = (2, 12).

[ k is the number of columns and n is the total number of observations]