Quantitative Techniques Name:

Mid- Term -A
Maximum Marks: 30 Total Time: 90 Minutes

Note:
• Q1- Q4 are Easy, Q5-Q7 are slightly challenging. This should help you recognise the depth of your understanding of the
topic.
• Please state any assumptions you’re making clearly.
• You can use the z-tables and t-tables provided at the end of the question paper.

Q1. Suppose you have a normally distributed variable with known variance. How many standard errors do you need to add
and subtract from the sample mean so that you obtain 95% confidence intervals? Briefly explain why [2.0 Points]

Q2. 300 bolts were randomly chosen from a manufacturing warehouse and individually weighed. The mean weight was
0.978 g with a standard deviation of 0.042. Find the 95% confidence interval for the mean weight of the bolt (because it is a
large n, you may use standard normal distribution). [3.0 Points]

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Q3. The record of weights of the male population follows the normal distribution. Its mean and standard deviations are 70
kg and 15 kg respectively. If a researcher considers the records of 50 males, then what would be the mean and standard
deviation of the chosen sample? [2.0 Points]

Q4. Find out the margin of error (E) when the sample size is 150 and the population standard deviation is σ = 6500 and you
are needed to establish a 99% confidence interval for μ. [3.0 Points]

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Q5. ABC Corporation produces a certain type of electronic component, and the quality control team has found that the
lengths of these components follow a normal distribution with a mean length of 25 millimetres and a standard deviation of
3 millimetres.
1. What is the probability that a randomly selected component will have a length between 23 millimetres and 27
millimetres? [2 Points ]
2. The production manager wants to set a specification for the component lengths to ensure that 96% of the
components meet the requirements. What should be the upper and lower length limits for the specification? [2
Points ]
3. If the company wants to ensure that no more than 5% of the components are rejected due to being too short, what
minimum length should they set as the lower specification limit? [2 Points ]

Please use the standard normal distribution table to find the probabilities.

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Q6. Amazon.com, a popular e-commerce retailer, wants to estimate the average order value of their customers. They take a
random sample of 10 recent orders and find that the sample mean order value is $75 with a sample standard deviation of
$10.
1. Calculate a 90% confidence interval for the population mean order value. [2 marks]
2. How can Amazon Company interpret the results of this confidence interval in the context of their business? What
conclusions can they draw about the average order value of their customers? [2 marks]

Q7. Swetha, who joined the Imperial Bank of Hyderabad as an analyst, is trying to estimate the 95 percent two-sided
confidence interval for the average monthly profits of tiny units owned by women entrepreneurs.
She asked her assistant Rangaswamy to collect the data from 100 tiny units, selected randomly. Based on the sample average
given to her by Rangaswamy, she calculated a 95 percent confidence interval using the population standard deviation, σ,
which was obtained from the earlier data available in the bank and prepared her report for the managing committee of the
bank.
After she had completed her report, Rangaswamy told her that he could cover only 64 units and the sample average that he
had given her is based on data from 64 units only. When she recalculated the confidence interval (same confidence level) she
noticed that the lower limit of the interval had shifted by Rs. 392, as compared to the previous interval.
1. What is the value of σ that Swetha used in the calculation of the confidence interval? [2 Points]
2. What is the width of the confidence interval when Swetha reduced the confidence level to 90 percent? [2
Points]

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3. What are the lower and upper limits of a 95% confidence interval (two-sided) based on the above sample,
if the sample mean turned out to be 201,200? [2 Points]
4. The sample mean calculated from the data is 201,200. Swetha decided to use the standard deviation, s,
obtained from the sample (sample of 64 observations) in the calculation of a 99% confidence interval (two-
sided) for μ. What are the upper and lower limits of this confidence interval, if s = 10,500 [2 Points]
5. Swetha wanted a 99 percent confidence interval. She also wanted that width of the interval should not be
more than Rs. 2575. What should be minimum sample size that will meet the above requirements? (assume
that σ = 10,000 for this purpose) [2 Points]

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