Testing of Hypothesis

Hypothesis

A statistical hypothesis is a claim or

assertion either about the value of a
single parameter, about the values of
several parameters, or about the form
of an entire probability distribution.

Statistical Methods

Usha A. Kumar, IIT Bombay

Developing Null and

Alternative Hypotheses

An automobile model currently

attains an average fuel efficiency of
24 miles per gallon. A productresearch group has developed a new
engine to increase the miles-pergallon rating.
H0 : = 24
H1 : > 24
Statistical Methods

Usha A. Kumar, IIT Bombay

Developing Null and

Alternative Hypotheses

A quality-control inspector has to decide

whether to accept or reject the entire
shipment on the basis of a sample.
Assume that a mean length of 2 inches is
desired for a specific part. If the mean is
greater or less than two inches, the parts
will cause quality problems in the assembly
operation.
H0 : = 2
H1 : 2
Statistical Methods

Usha A. Kumar, IIT Bombay

Example
Suppose the research and development
department of an organisation manufacturing
a certain type of battery comes up with a
new type of manufacturing process claiming
that it increases the life of batteries. Suppose
the existing average life is 400 hrs. A sample
of batteries manufactured according to new
process is chosen to test whether the claim of
the research and development department is
justified. State the appropriate null and
alternative hypotheses.

Example

Consider an automatic bottling machine

that fills two-litre bottles with cola. The
amount of cola filled in every bottle on
the average is expected to be two litres.
Suppose a consumer advocate suspects
that the average amount of cola is less
than two litres. What should be the null
and alternative hypotheses?

Example

Consider a work operation which,

according to a collective agreement,
requires 25 seconds to perform. Both
management and the union wish to
know whether this standard is still
appropriate under current operating
conditions. State the null and
alternative hypotheses.

Type I and Type II Errors

Reject H0

State of Nature
H0 is true
H0 is false
Incorrect
Correct
decision
decision

Do not reject Correct

H0
decision

Statistical Methods

Incorrect
decision

Usha A. Kumar, IIT Bombay

P[Rejecting H0 |H0 is true] +

P[Accepting H0|H0 is true] = 1
P[Rejecting H0|H0 is false] +
P[Accepting H0|H0 is false] = 1

Statistical Methods

Usha A. Kumar, IIT Bombay

Example
Suppose the research and development
department of an organisation manufacturing
a certain type of battery comes up with a
new type of manufacturing process claiming
that it increases the life of batteries. Suppose
the existing average life is 400 hrs. A sample
of 100 batteries manufactured according to
new process has an average life of 425 hrs
and a standard deviation of 45 hrs. Is the
claim of the research and development
department justified?
Statistical Methods

Usha A. Kumar, IIT Bombay

One-tailed test:
H0 : = 400
H1 : > 400

Statistical Methods

Usha A. Kumar, IIT Bombay

Reject H0 at level of significance if

X >c
where c is such that

P[ X > c | H 0 ] =
Statistical Methods

Usha A. Kumar, IIT Bombay

Example
The income tax department has recorded the
following income of a doctor for eight days as:
Day no. Income (Rs.)
1
2
3
4
5
6
7
8

1000
800
950
1200
1300
785
1050
400

Statistical Methods

Usha A. Kumar, IIT Bombay

Example 2: (contd)
Assuming that the daily income is normally
distributed, test the hypothesis that the mean
daily income is Rs. 1000?

Statistical Methods

Usha A. Kumar, IIT Bombay

Example 3
A coffee machine is supposed to deliver an
average of 7.7 ounces of coffee into 8-ounce
cups. The company owning the machine has
received complaints that some persons have
been receiving cups that are only half full. The
company finds that a sample of ten fills
produced an average fill of 7.55 ounces with a
standard deviation of 0.2 ounce. Should the
machine be adjusted or not? Assume that the
fills are normally distributed.
Statistical Methods

Usha A. Kumar, IIT Bombay

Example 4

A companys market share is very sensitive to

both its level of advertising and the levels of its
competitors advertising. A firm known to have
a 56% market share wants to test whether this
value is still valid in view of recent advertising
campaigns of its competitors and its own
increased level of advertising. A random sample
of 500 consumers reveals that 298 use the
companys product. Is there evidence to
conclude that the companys market share is
no longer 56%, at the 0.01 level of
significance?
Statistical Methods

Usha A. Kumar, IIT Bombay

Example 5
A comparison has to be made on the monthly
salaries of two groups of workers. A random
sample of 46 workers from group A has a
monthly average of Rs. 2340 with the sample
standard deviation of Rs. 100. The mean
monthly salary of 46 workers from group B is
Rs. 2100 with the sample standard deviation of
Rs. 70. Do the data present sufficient evidence
to indicate a difference in the average salary
for the two groups of workers?
Statistical Methods

Usha A. Kumar, IIT Bombay

Example 6
A manufacturing organization is manufacturing
a machinery spare part. There are two lines of
production, line A and line B. In order to
compare the relative performance of the two
production lines 100 spare parts were sampled
from each line. Line A contained 10 defectives,
while line B contained 15 defectives. Can it be
concluded that the two lines of production are
identical?
Statistical Methods

Usha A. Kumar, IIT Bombay

Test for the variance of a Normal

Population

In many problems of business and industry, it

is required to study the variability of the
process. In particular, it may be necessary to
ascertain whether the variability is within a
reasonable level of control.

Statistical Methods

Usha A. Kumar, IIT Bombay

Example 8
A company engaged in the manufacturing of
radio tubes during the last 10 years finds that
the life of its tubes has a variance of 0.6 years.
As a result of some qualitative improvement
brought about in the product, the company
claims that the variance of the life of its tubes
has reduced. Using 0.05 level of significance,
test the claim made by the company if the
sample variance of 9 tubes is observed as 0.45
years.
Statistical Methods

Usha A. Kumar, IIT Bombay

Test for equality of variances in

two Normal Populations

Equality of means in two normal populations

depends upon the assumption of equality of
variances.
To compare the precision of one measuring
device with that of another.
To compare the stability of two manufacturing
processes.

Statistical Methods

Usha A. Kumar, IIT Bombay

F Distribution

If S12 and S22 are the variances of

independent samples of size n1 and n2 taken
from normal populations with variances 12
and 22, respectively, then

F=S
S

2
1
2
2

2
1

2
2

has an F-distribution with n1-1 and n2-1

degrees of freedom.
Statistical Methods

Usha A. Kumar, IIT Bombay

Example 9
The closing price of two stocks A,B were noted
for 25 days. Stock A is supposed to be a stable
stock while stock B is usually considered to be
fluctuating between wide margins. The sample
variances were found to be 5.25 and 13.77
respectively. Assuming a normal distribution
and a level of significance of 0.05, is there
sufficient evidence for the common belief?

Statistical Methods

Usha A. Kumar, IIT Bombay