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Bankole Oni

Project Part B

Keller Graduate School of Management

MATH 533: Managerial Statistics

Project Part B: Hypothesis Testing and Confidence Intervals

a. The average (mean) annual income was greater than $45,000.
For this problem, the claim is that the income is greater than $45,000. The first steps are
we have to find the standard deviation and mean. From Minitab, the mean and standard
deviation were as shown in the picture

From the claim, our null hypotheses is we have H0: $45,000 and
Alternatively, Ha: < 45,000
In this case, we need to apply the Z-test we know the following;
= .05, confidence level of 95%
The following steps were taken in Minitab
i.

Stat >> Basic Statistics >> 1 Sample Z

ii.

Input Sample Size, Mean, Standard Deviation

iii.

Check box next to Perform Hypothesis Test

iv.

Enter hypothesized mean

The results were as follows

Based on the results, the p-value is 0.52. In this case, if the p-value is less than 0.05 and as we
can see the p-value is higher than significance level so we do not reject the null hypothesis.
Next step is to find the critical region
Graph>> Probability Distribution Plot>> View Probability >> Ok
From the Minitab graph, Z=1.645. And in terms of z, we need to reject the hypotheses if z <
1.645

Its is not in the rejection region so we do not reject.

Based on the results obtained, we do not have sufficient evidence to reject the null hypothesis
claim that the mean is equal to $45,000.
Lastly we have to find the confidence interval and again we go to Minitab
i.

Stat >> Basic Statistics >> 1 Sample Z

ii.

Input Sample Size, Mean, Standard Deviation

iii.

Uncheck the box next to Perform Hypothesis Test

iv.

Click on options: 95% and not equal

Therefore, for a 95% confidence, the interval is ($42,170, $49,870)

b. The true population proportion of customers who live in a suburban area is less
than 45%.
For this problem, we use the Z test as in a above. For this case, our p will be the
true population of the customers living in suburban areas. For the purpose of this,
our hypothesis are;
Ho: p < .45

Alternatively, we can have the true population proportion of customers who live in a
suburban area is greater than 45%.
Ha: p > 0.45
This will be a one tail test and we will have to use the data provided test the hypothesis
=0.05. if z>1.645, we have to reject the null hypothesis
Test and CI for One Proportion
Test of p = 0.45 vs p > 0.45

Sample
1

X
15

N
50

Sample p
0.300000

95% Lower
Bound
0.193401

Z-Value
-2.13

P-Value
0.983

Test and CI for One Proportion

Test of p = 0.45 vs p not = 0.45
Sample
1

X
15

N
50

Sample p
0.300000

95% CI
(0.172980, 0.427020)

Z-Value
-2.13

P-Value
0.033

Since the p-value is larger than 0.05, we do not reject the null hypothesis.
The maximum limit of 0.173 is greater than 0.3 and in this case, there is not

enough evidence to support the fact that the residence of suburban are less
than 45%
c. The average (mean) number of years lived in the current home is greater than 8
years.
First null hypothesis is Ho: u > 8 alternatively Ho: u < 8. Since the considered sample size is
greater than 30, we will use the z-test. It is a one-tailed z-test
Again, our critical value is 1.645 so we have to reject the null hypothesis is z < -1.645

One-Sample Z
Test of mu = 8 vs > 8
The assumed standard deviation = 4.531

N
50

Mean
9.600

SE Mean
0.641

95% Lower
Bound
8.546

Z
2.50

P
0.006

This is in the critical region so we reject the hypothesis and based on the data given, there is
enough evidence to conclude that the null hypothesis is false and we are 95% confident that the
avaerage number of years lived in a home is greater than 8 years.

d. The average (mean) credit balance for rural customers is less than $3,200.
In this case, our null hypothesis is H0: 3200, H1: <3200
Our considered sample size is 13 (13 rural customers) so we use a t-test.
Descriptive Statistics: balance
Variable
balance

Mean
3039

SE Mean
119

StDev
428

Our rejection region is 1.782, so we reject the hypothesis if z < -1.782

One-Sample Z
Test of mu = 3200 vs > 3200
The assumed standard deviation = 428

N
13

Mean
3039

SE Mean
119

95%
Lower
Bound
2844

Z
-1.36

P
0.912

The test statistics z = -1.35 and upper bound of 3251.

Since the p value is greater than 0.05, we can conclude that the credit balance of urban customers
was less than $3,200.
The confidence interval is (2806, 3272).
Conclusion
The data of AJ Davis has been analyzed and based on these results, marketing and management
decisions can be made regarding the future of AJ Davis.
From the analysis, we can conclude that the claim that the true population of individuals in the
suburban region is below the 45% mark is false as there wasnt sufficient evidence to prove it.
On the assumption that the average annual income greater than $45,000, we found the statement
to be true as there was enough evidence from the results of the data given.
Also, the credit balance for customers being less than $3,000 can be related to the number of
years lived in a community and of course as stated in the part A of the project individuals who
live in one place are often loyal customers and the store could take advantage of that.
Additionally individuals living in rural areas have a lower income hence the low credit balance
finance and marketing teams can find out who amongst those living in the rural areas might be
interested in taking more credit as this would increase sales. Lastly, management has to take in
consideration the yearly income of targeted individuals as this would go a long way in making
future decisions.