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Some marketing research studies indicate the "positive impact of store brand penetration on store profitability as measured by market share" (Lal,M.C.(2000). Building Store Loyalty Through Store Brands, Journal of Marketing Research, 37, no. 3, pp281). 

The manager of a local supermarket that sells four national brands (A, B, C and D) and one store brand (E) of orange juice wants to find out whether or not customers have a preference for a particular brand. Over the course of a month, the number of customers buying each brand of orange juice was noted; the results are shown in the table below:

BrandNo. of Customers
A66
B76
C60
D61
E53
Totals316

Test the null hypothesis that, in fact, customers at this supermarket do not have a preference for a particular brand of orange juice.

 

a)

Step 1: Null hypothesis

H0: Customers do not have a preference for a particular brand of orange juice.

Step 2: Alternative hypothesis

H1: Customers do have a preference for a particular brand of orange juice.

 

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b)

Step 3: Test statistic

Complete the following table: (input all values in the  expected column E  as exact decimals and input in the last column to 2 decimal places).

 OE(OE)2E
A 66 Expected answer: Expected answer:
B 76 Expected answer: Expected answer:
C 60 Expected answer: Expected answer:
D 61 Expected answer: Expected answer:
E 53 Expected answer: Expected answer:

Hence the test statistic is : χ2= Expected answer:

Input  the test statistic to 2 decimal places.

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c)

Step 4:  p-value range

Calculate , the degrees of freedom, for this test: ν=? Expected answer:

Use tables to find a range for your -value.  Choose the correct choice below. 

Expected answer:

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d)

Step 5: Conclusion

Given the  - value and the range you have found what is the strength of evidence against the null hypothesis?

Expected answer:

Your Decision in relation to the null hypothesis:

Expected answer:

Conclusion:

 

Expected answer:

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Advice

Step 3

 

Completing the table we have E=316/5=63.2 for all brands.

We do the last column calculations for brand A.

(OE)2E=(6663.2)263.2=0.12

to 2 decimal places.

 OE(OE)2E
A 66 63.2 0.12
B 76 63.2 2.59
C 60 63.2 0.16
D 61 63.2 0.08
E 53 63.2 1.65
      χ2=4.6

The test statistic is then:

χ2=(OE)2E=0.12+2.59+0.16+0.08+1.65=4.6

Step 4:

The degrees of freedom is given by: ν= no. of categories 1=51=4

The following are the critical values for ν=4.

p-value10%5%1%
Critical Value7.789.4913.28

Looking at this test statistic we see that the p-range is greater than 10%.

The conclusion we come to is that there is no evidence to suggest that customers have a preference between the brands. Hence we retain the null hypothesis.

\( \begingroup \)

You are employed as a business analyst for the NHS European Health Insurance Card (EHIC) division.

Before launching a new automatic telephone application system, you are required to find out whether the number of calls made to the department, per minute, follows a Poisson distribution. 

Over a period of 307 minutes, the following information was obtained:

No. of Calls (X)Frequency per minute
0103
1116
266
316
46
5+0

 

a)

Step 1: Null hypothesis

$\operatorname{H}_0$: The number of calls per minute follows a Poisson distribution.

Step 2: Alternative hypothesis

$\operatorname{H}_1$: The number of calls per minute does not follow a Poisson distribution.

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b)

Step 3: Test statistic

(a) Calculate the Poisson rate parameter to 2 decimal places  

$\lambda=\;$? Expected answer:

(b) Calculate the Poisson probabilities for each category using the value for $\lambda$  you have just calculated.

Calculate all probabilities to 3 decimal places.

$P(X=0)$ Expected answer:
$P(X=1)$ Expected answer:
$P(X=2)$ Expected answer:
$P(X=3)$ Expected answer:
$P(X=4)$ Expected answer:
$P(X \gt 4)$ Expected answer:

 

(Calculate $P(X \gt 4)$ as $1-P(X=0)-P(X=1)-P(X=2)-P(X=3) - P(X=4)$  using the probabilities you have found).

c) Calculate the expected frequencies to 2 decimal places using the probabilities you have just calculated.

Observed Frequencies Expected Frequencies
$\var{a}$ Expected answer:
$\var{b}$ Expected answer:
$\var{c}$ Expected answer:
$\var{d}$ Expected answer:
$\var{f}$ Expected answer:
$\var{t}$ Expected answer:

How many categories need to be pooled to make sure that the expected frequency for each category is $\geq 5$  ?   Expected answer:

Hence the test statistic is: $\chi^2=\;$? Expected answer:

Input the test statistic to 2 decimal places.

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c)

Step 4:  p-value range

After pooling, calculate , the degrees of freedom, for this test: . 

$\nu =\;$? Expected answer:

Use tables to find a range for your -value.  Choose the correct choice below. 

Expected answer:

 

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d)

Step 5: Conclusion

 

Given the  $p$- value and the range you have found what is the strength of evidence against the null hypothesis?

Expected answer:

Your Decision:

 

Expected answer:

Conclusion:

 

Expected answer:

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Advice

Step 3.

a) $\lambda$  is the mean of the data i.e.

\[\lambda = \frac{0 \times \var{a}+1\times \var{b}+2\times\var{c}+3\times\var{d}+4\times\var{f}+5\times \var{t}}{\var{thismany}} = \var{v}\] to 2 decimal places.

b) This is the value of $\lambda$ we use to calculate the probabilities, to 3 decimal places,  assuming that the data is from a Poisson distribution with this parameter.

For example, $ \displaystyle P(X=2)=\frac{e^{-\lambda}\lambda^2}{2!}=\frac{e^{-\var{v}}\times \var{v}^2}{2}=\var{x[2]}$

to 3 decimal places.

The next table shows the values to 3 decimal places you should have obtained:

 

$P(X=0)$ $\var{x[0]}$
$P(X=1)$ $\var{x[1]}$
$P(X=2)$ $\var{x[2]}$
$P(X=3)$ $\var{x[3]}$
$P(X=4)$ $\var{x[4]}$
$P(X \gt 4)$ $\var{x5}$

c) Using this probability then the expected number of occurences of 2 calls in a minute is \[P(X=2) \times \var{thismany} = \var{x[2]}\times \var{thismany}=\var{ex[2]}\]  to 2 decimal places.

In the same way we find all the expected frequencies assuming that it is a Poisson distribution with parameter $\lambda=\var{v}$.

The following table shows the actual observed frequencies and the expected frequencies, to 2 decimal places, under this assumption.

No. of Calls (X) ObservedExpected Frequency
103108.37
116112.98
6658.64
1620.26
65.22
01.54

The expected frequencies in the last 2 categories need to be pooled as the  expected frequency for the last category is less than 5.

Hence we obtain the following table used to calculate the test statistic:

No. of Calls (X) ObservedExpected Frequency
103108.37
116112.98
6658.64
1620.26
66.76

We now use the last table to calculate the $\chi^2$ statistic to see if there is a reasonable match between the observed and expected frequencies. 

We have:

\[\chi ^ 2 = \simplify[all,!collectNumbers]{({a} -{ex[0]}) ^ 2 / {ex[0]} + ({b} -{ex[1]}) ^ 2 / {ex[1]} + ({c} -{ex[2]}) ^ 2 / {ex[2]} + ({dp} -{ep4}) ^ 2 / {ep4} + {z} * (({fp} -{ep5}) ^ 2 / {ep5}) = {ch}}\] to 2 decimal places.

Step 4:

The degrees of freedom is given by:  $\nu=\;$no. of pooled categories $- 2 =\var{6-few+1}-2=\var{5-few}$

(We have to take away $2$ from the number of pooled categories as we have estimated the parameter $\lambda$ .)

The following are the critical values for $\nu=\var{5-few}$:

p-Value10%5%1%
Critical Value6.257.8211.34

Comparing these values with the the test statistic we see that the  $p$-value is greater than 10%.

Step 5: Conclusion

Hence there is no evidence against and so we retain the null hypothesis that the number of calls per minute follows a Poisson distribution.

 

 

\( \endgroup \)
\( \begingroup \)

The human resources department of a large finance company is attempting to determine if an employee’s performance is influenced by their undergraduate degree subject.

The 5 subjects considered are: Marketing, Marketing & Management, Business Management, Accounting & Finance and Mathematics.

Personnel ratings are grouped as Excellent, Strong and Average.

A recent assessment gave the following results:

  Excellent Strong Average Totals
Marketing {a} {b} {c} {r1}
Marketing & Management {d} {f} {t} {r2}
Business Management {a1} {b1} {c1} {r3}
Accounting & Finance {d1} {f1} {t1} {r4}
Mathematics {a2} {b2} {c2} {r5}
Totals {col1} {col2} {col3} {tot}

Test the null hypothesis that there is no association between degree subject and performance.

a)

Step 1: Null hypothesis

$H_0$: There is no association between degree subject and performance.

Step 2: Alternate hypothesis

$H_1$: There is an association between degree subject and performance.

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b)

Step 3: Test statistic

You are given the expected frequencies (all to $3$ decimal places) for Marketing, Marketing & Management and Accounting & Finance.

You have to calculate the expected frequencies for Business Management and Mathematics and put them in the following table.

Input each expected frequency to $3$ decimal places.

EXPECTED FREQUENCIES Excellent Strong Average
Marketing {e1} {e2} {e3}
Marketing & Management {e4} {e5} {e6}
Business Management Expected answer: Expected answer: Expected answer:
Accounting & Finance {e10} {e11} {e12}
Mathematics Expected answer: Expected answer: Expected answer:

Now calculate the test statistic $\chi^2 = \phantom{{}}$ Expected answer: as the sum of all values in this table.

Input the test statistic to $3$ decimal places.

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c)

Step 4: $p$-value range

Calculate $\nu$, the degrees of freedom, for this test.

$\nu = \phantom{{}}$ Expected answer:

Use tables to find a range for your $p$-value. Choose from the options below.

Expected answer:

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d)

Step 5: Conclusion

Given the $p$-value and the range you have found, what is the strength of evidence against the null hypothesis?

Expected answer:

Your decision:

Expected answer:

Your conclusion:

Expected answer:

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Advice

Step 3

The expected frequencies are given by replacing a value in the table by the expected value:

\[E = \frac{\textrm{row total} \times \textrm{column total}}{\textrm{overall total}}\]

For example, the Excellent category for Marketing & Management lies in the second row (with sum $\var{r2}$) and the first column (with sum $\var{col1}$).

So the expected frequency of Excellent Marketing & Management students is:
\[E = \simplify[]{({r2}*{col1})/({tot})} = \var{e4}\]

Hence we get the following table of expected frequencies:

EXPECTED FREQUENCIES Excellent Strong Average
Marketing {e1} {e2} {e3}
Marketing & Management {e4} {e5} {e6}
Business Management {e7} {e8} {e9}
Accounting & Finance {e10} {e11} {e12}
Mathematics {e13} {e14} {e15}

In order to test to see if there is an association we compare this table with the table of observed values and calculate the test statistic by looking at

\[\chi^2 = \sum \frac{(O - E)^2}{E}\]

Calculating the values for Business Management and Mathematics, all to 3 decimal places, you should obtain:

$\frac{(O - E)^2}{E}$ Excellent Strong Average
Marketing {ch1} {ch2} {ch3}
Marketing & Management {ch4} {ch5} {ch6}
Business Management {ch7} {ch8} {ch9}
Accounting & Finance {ch10} {ch11} {ch12}
Mathematics {ch13} {ch14} {ch15}

To find the $\chi^2$ statistic you sum these fifteen values to get:

\[\begin{eqnarray} \chi^2 &=& \var{ch1} + \var{ch2} + \var{ch3} + \var{ch4} + \var{ch5} +\\ && \var{ch6} + \var{ch7} + \var{ch8} + \var{ch9} + \var{ch10} +\\ && \var{ch11} + \var{ch12} + \var{ch13} + \var{ch14} + \var{ch15} \\ &=& \var{ch}. \end{eqnarray}\]

Step 4

The degrees of freedom is given by:

\[\nu = (\textrm{no. of rows} - 1) \times (\textrm{no. of columns} - 1) = 4 \times 2 = 8\]

The following are the critical values for $\nu = 8$:

$p$-value $10 \%$ $5 \%$ $1 \%$
Critical value $\var{t90}$ $\var{t95}$ $\var{t99}$

Comparing these values with the the test statistic we see that the $p$-value {pResult}.

Step 5: Conclusion

As the $p$-value {pResult}, there is {evi} evidence against $H_0$.

Hence we {retain}.

{summary}

\( \endgroup \)