Preview

Variance and Decision-making Approach

Satisfactory Essays
Open Document
Open Document
1582 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Variance and Decision-making Approach
Business Statistics:
A Decision-Making Approach
7th Edition

Chapter 11
Hypothesis Tests and Estimation for Population Variances

Business Statistics: A Decision-Making Approach, 7e © 2008 Prentice-Hall, Inc.

Chap 11-1

Chapter Goals
After completing this chapter, you should be able to:








Formulate and complete hypothesis tests for a single population variance
Find critical chi-square distribution values from the chi-square table
Formulate and complete hypothesis tests for the difference between two population variances
Use the F table to find critical F values

Business Statistics: A Decision-Making Approach, 7e © 2008 Prentice-Hall, Inc.

Chap 11-2

Hypothesis Tests for Variances
Hypothesis Tests for Variances

Tests for a Single
Population Variance

Tests for Two
Population Variances

Chi-Square test statistic

F test statistic

Business Statistics: A Decision-Making Approach, 7e © 2008 Prentice-Hall, Inc.

Chap 11-3

Single Population
Hypothesis Tests for Variances

Tests for a Single
Population Variance

*

Chi-Square test statistic

Business Statistics: A Decision-Making Approach, 7e © 2008 Prentice-Hall, Inc.

H0: σ2 = σ02
HA: σ2 ≠ σ02

Two tailed test

H0: σ2  σ02
HA: σ2 < σ02

Lower tail test

H0: σ2 ≤ σ02
HA: σ2 > σ02

Upper tail test

Chap 11-4

Chi-Square Test Statistic
Hypothesis Tests for Variances
The chi-squared test statistic for a Single Population Variance is:

Tests for a Single
Population Variance

Chi-Square test statistic

(n  1)s

2 σ 2

*

2

where
2 = standardized chi-square variable n = sample size s2 = sample variance σ2 = hypothesized variance

Business Statistics: A Decision-Making Approach, 7e © 2008 Prentice-Hall, Inc.

Chap 11-5

The Chi-square Distribution




The chi-square distribution is a family of distributions, depending on degrees of freedom:
d.f. = n - 1

0 4 8 12 16 20 24 28
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Good Essays

    Statistics Project
    • 599 Words
    • 3 Pages

    Statistics Project

    Sample Variance: 86.49866667 (Calculation shown on the next page: used a spreadsheet and pasted into the document)…

    • 599 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Assignment 4
    • 2820 Words
    • 14 Pages

    Assignment 4

    9. In performing a chi-square test of independence, as the difference between the respective observed and expected frequencies decrease, the probability of concluding that the row variable is independent of the column…

    • 2820 Words
    • 14 Pages
    Good Essays
    Read More
  • Good Essays

    Variance Analysis

    • 1020 Words
    • 3 Pages

    Variance Analysis

    Variance Analysis is utilized to support the management during the initial stages. It is the procedure of investigating each variance between the actual and budgeted costs to determine the reasons as to why the planned amount was not met, in more detailed explanation (Ventureline, 2012). There are several influences that contribute to the variance report and one is the department’s assumptions, second is the possible risk for this assumption, and third is the actual expense used for the budget. Let’s say the CEO or Director announces the monthly budget that the department needs to meet. Once the department receives the monthly budget outcomes, the budget for supplies was not properly utilized; therefore the salary is higher than the premeditated budget.…

    • 1020 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    BADM 528 2013 Fall Syllabus
    • 2736 Words
    • 11 Pages

    BADM 528 2013 Fall Syllabus

    Anderson, Sweeney and Williams (2011). Essentials of Statistics for Business and Economics, 6th edition. Thomson-Southwest Publishing: ISBN: 13: 978-0-538-75457-6…

    • 2736 Words
    • 11 Pages
    Powerful Essays
    Read More
  • Good Essays

    Variance Analysis
    • 477 Words
    • 2 Pages

    Variance Analysis

    This is a paper to explain the variance in the monthly budget for the hospital department. This will determine if the budget cause our department to run efficient and effective. While the variance analysis is the best way to measure performance the results in the monthly budget showed that salaries were higher and supplies came in lower. What variances allowed salaries to be higher while cost for supplies remained low? In order to do this we must determine the reason for variance in the department budget. The main factors to determine the change can be: input prices, productivity, or departmental volume (Cleverly 2011).…

    • 477 Words
    • 2 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Variance Analysis
    • 390 Words
    • 2 Pages

    Variance Analysis

    I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledge and disclosed in the paper. I have also cited any sources from which I used data, ideas of words, whether quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course.…

    • 390 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Decision Making
    • 496 Words
    • 2 Pages

    Decision Making

    Capital Intensive: A business process or an industry that requires large amounts of money and other financial resources to produce a good or service. A business is considered capital intensive based on the ratio of the capital required to the amount of labor that is required. (investopedia)…

    • 496 Words
    • 2 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Variance Analysis
    • 902 Words
    • 3 Pages

    Variance Analysis

    Variance Analysis is used to promote management action in the earliest stages. It is the process of examining in detail each variance between actual and budgeted costs to conclude the reasons as to why the budgeted amount was not met (Ventureline, 2012). There are several factors that go into a variance report. One is the assumption of the department. The second is the risk of the assumption. And thirdly the actual expense used to portray the budget. The vice president announces the budget that needs to be met monthly. Upon receiving the monthly budget results, the materials budget was not used properly, and the salary was higher than the planned budget. I will be explaining the reasons as to why the salary bases were higher than the given amount, and the reasons why the materials budget were not met, and also what needs to be done in future to prevent from having to exceed the salary amount.…

    • 902 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Decision Making
    • 411 Words
    • 2 Pages

    Decision Making

    The general nature of the problem is not having a location due to Katrina and having to make…

    • 411 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Analysis of Variance
    • 2028 Words
    • 9 Pages

    Analysis of Variance

    If an experiment has a quantitative outcome and two categorical explanatory variables that are defined in such a way that each experimental unit (subject) can be exposed to any combination of one level of one explanatory variable and one level of the other explanatory variable, then the most common analysis method is two-way ANOVA. Because there are two different explanatory variables the effects on the outcome of a change in one variable may either not depend on the level of the other variable (additive model) or it may depend on the level of the other variable (interaction model). One common naming convention for a model incorporating a k-level categorical explanatory variable and an m-level categorical explanatory variable is “k by m ANOVA” or “k x m ANOVA”. ANOVA with more that two explanatory variables is often called multi-way ANOVA. If a quantitative explanatory variable is also included, that variable is usually called a covariate. In two-way ANOVA, the error model is the usual one of Normal distribution with equal variance for all subjects that share levels of both (all) of the explanatory variables. Again, we will call that common variance σ 2 . And we assume independent errors.…

    • 2028 Words
    • 9 Pages
    Good Essays
    Read More
  • Good Essays

    Variance analysis
    • 960 Words
    • 3 Pages

    Variance analysis

    In this part of the report, we analyze the variances between our pro-forma statements we had projected and the actual results we received from the BPG game. Looking at the variances, it can be seen that most of the numbers compared are not too far apart from each other when comparing our actual numbers to the projected analysis. This is due to the fact our forecast was successful. It was however not 100% accurate in terms of predicting our future numbers.…

    • 960 Words
    • 3 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Decision Theory and Expected Value
    • 392 Words
    • 2 Pages

    Decision Theory and Expected Value

    16. A concessions manager at the Tech versus A&M football game must decide whether to have the…

    • 392 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Better Essays

    Decision Making
    • 1294 Words
    • 6 Pages

    Decision Making

    This case study deals with leadership, decision making, and effective communication. Also, how important it is for a President and the staff to work together in a team to solve a problem. Not every decision is the correct resolution, but there are better decisions made when there is a group effort. This discussion will be completed through an analysis of the case study on decision making based on Mission and Vision of an Organization. This discussion will determine the best decision making method, the final decision by the President, and how the decision will be communicated to the staff and the public.…

    • 1294 Words
    • 6 Pages
    Better Essays
    Read More
  • Good Essays

    variance analysis
    • 605 Words
    • 2 Pages

    variance analysis

    When dealing with profitability, every company has to make a good decision. It is quite critical for manager to use the variance analysis tools properly. By using variance, managers can make adjustment on their company performance in order to achieve the highest profit.…

    • 605 Words
    • 2 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Decision Making
    • 470 Words
    • 2 Pages

    Decision Making

    I did use most of the decision making process discussed in chapter 3 of the text book…

    • 470 Words
    • 2 Pages
    Satisfactory Essays
    Read More

Related Topics