C723 QUANTITATIVE ANALYSIS FOR BUSINESS-
FINAL STUDY GUIDE
Hypothesis - Answers - is an assumption about a population parameter such as a mean
or a proportion
null hypothesis (H0) - Answers - -represents the status quo
-states a belief that the population parameter is ≤, =, or ≥ a specific value
-believed to be true unless there is overwhelming evidence to the contrary
alternative hypothesis (H1) - Answers - -represents the opposite of the null hypothesis
-believed to be true if the null hypothesis is found to be false
-always states that the population parameter is >, ≠, or < a specific value
two-tail hypothesis test - Answers - is used whenever the alternative hypothesis is
expressed as ≠
one-tail hypothesis test - Answers - is used when the alternative hypothesis is stated as
< or >
Type I error - Answers - -occurs when the null hypothesis is rejected when it is true
-when it occurs the producer is looking for a problem in its process that does not exist
Type II error - Answers - -occurs when we fail to reject the null hypothesis when it is not
true
-when it occurs the customer is getting a product from a process that is not performing
properly
Correlation analysis - Answers - -is used to measure both the strength and direction of a
linear relationship between two variables
-A relationship is linear if the scatter plot of the independent and dependent variables
has a straight-line pattern
correlation coefficient, r - Answers - -indicates both the strength and direction of the
linear relationship between the independent and dependent variables
population correlation coefficient (ρ) - Answers - refers to the correlation between all
values of two variables of interest in a population
confidence interval for the mean - Answers - is an interval estimate around a sample
mean that provides us with a range within which the true population mean is expected
to lie
, confidence level - Answers - is defined as the probability that the interval estimate will
include the population parameter of interest
Student's t-distribution - Answers - is used in place of the normal probability distribution
when the sample standard deviation, s, is used in place of the population standard
deviation, σ
probability sample - Answers - is a sample in which each member of the population has
a known, nonzero, chance of being selected for the sample
simple random sample - Answers - is a sample in which every member of the population
has an equal chance of being chosen
Sampling error - Answers - is defined as the difference between the sample statistic and
the population parameter
Central Limit Theorem - Answers - states that the sample means of large-sized samples
will be normally distributed regardless of the shape of their population distributions
normal probability distribution - Answers - is useful when the data tend to fall into the
center of the distribution and when very high and very low values are fairly rare
exponential distribution - Answers - is used to describe data where lower values tend to
dominate and higher values don't occur very often.
uniform distribution - Answers - describes data where all the values have the same
chance of occurring
Discrete data - Answers - -Values are whole numbers (integers)
-Usually counted, not measured
Continuous data - Answers - -Can potentially take on any value, depending only on the
ability to measure accurately
-Often measured, fractional values are possible
Variance - Answers - a measure of the spread of the individual values around the mean
of a data set
expected monetary value (EMV) - Answers - is the mean of a discrete probability
distribution when the discrete random variable is expressed in terms of dollars
Probability - Answers - -a numerical value ranging from 0 to 1
-indicates the chance, or likelihood, of a specific event occurring
Experiment - Answers - The process of measuring or observing an activity for the
purpose of collecting data
FINAL STUDY GUIDE
Hypothesis - Answers - is an assumption about a population parameter such as a mean
or a proportion
null hypothesis (H0) - Answers - -represents the status quo
-states a belief that the population parameter is ≤, =, or ≥ a specific value
-believed to be true unless there is overwhelming evidence to the contrary
alternative hypothesis (H1) - Answers - -represents the opposite of the null hypothesis
-believed to be true if the null hypothesis is found to be false
-always states that the population parameter is >, ≠, or < a specific value
two-tail hypothesis test - Answers - is used whenever the alternative hypothesis is
expressed as ≠
one-tail hypothesis test - Answers - is used when the alternative hypothesis is stated as
< or >
Type I error - Answers - -occurs when the null hypothesis is rejected when it is true
-when it occurs the producer is looking for a problem in its process that does not exist
Type II error - Answers - -occurs when we fail to reject the null hypothesis when it is not
true
-when it occurs the customer is getting a product from a process that is not performing
properly
Correlation analysis - Answers - -is used to measure both the strength and direction of a
linear relationship between two variables
-A relationship is linear if the scatter plot of the independent and dependent variables
has a straight-line pattern
correlation coefficient, r - Answers - -indicates both the strength and direction of the
linear relationship between the independent and dependent variables
population correlation coefficient (ρ) - Answers - refers to the correlation between all
values of two variables of interest in a population
confidence interval for the mean - Answers - is an interval estimate around a sample
mean that provides us with a range within which the true population mean is expected
to lie
, confidence level - Answers - is defined as the probability that the interval estimate will
include the population parameter of interest
Student's t-distribution - Answers - is used in place of the normal probability distribution
when the sample standard deviation, s, is used in place of the population standard
deviation, σ
probability sample - Answers - is a sample in which each member of the population has
a known, nonzero, chance of being selected for the sample
simple random sample - Answers - is a sample in which every member of the population
has an equal chance of being chosen
Sampling error - Answers - is defined as the difference between the sample statistic and
the population parameter
Central Limit Theorem - Answers - states that the sample means of large-sized samples
will be normally distributed regardless of the shape of their population distributions
normal probability distribution - Answers - is useful when the data tend to fall into the
center of the distribution and when very high and very low values are fairly rare
exponential distribution - Answers - is used to describe data where lower values tend to
dominate and higher values don't occur very often.
uniform distribution - Answers - describes data where all the values have the same
chance of occurring
Discrete data - Answers - -Values are whole numbers (integers)
-Usually counted, not measured
Continuous data - Answers - -Can potentially take on any value, depending only on the
ability to measure accurately
-Often measured, fractional values are possible
Variance - Answers - a measure of the spread of the individual values around the mean
of a data set
expected monetary value (EMV) - Answers - is the mean of a discrete probability
distribution when the discrete random variable is expressed in terms of dollars
Probability - Answers - -a numerical value ranging from 0 to 1
-indicates the chance, or likelihood, of a specific event occurring
Experiment - Answers - The process of measuring or observing an activity for the
purpose of collecting data
