CHAPTER 10:
Hypothesis Testing,One Population
Mean or Proportion
to accompany
Introduction to Business Statistics
fourth edition,by Ronald M,Weiers
Presentation by Priscilla Chaffe-Stengel
Donald N,Stengel
? 2002 The Wadsworth Group
Chapter 10 - Learning Objectives
? Describe the logic of and transform verbal
statements into null and alternative hypotheses.
? Describe what is meant by Type I and Type II
errors.
? Conduct a hypothesis test for a single population
mean or proportion.
? Determine and explain the p-value of a test
statistic.
? Explain the relationship between confidence
intervals and hypothesis tests.
? 2002 The Wadsworth Group
Null and Alternative Hypotheses
? Null Hypotheses
– H0,Put here what is typical of the population,
a term that characterizes,business as usual”
where nothing out of the ordinary occurs.
? Alternative Hypotheses
– H1,Put here what is the challenge,the view of
some characteristic of the population that,if it
were true,would trigger some new action,
some change in procedures that had
previously defined,business as usual.”
? 2002 The Wadsworth Group
Beginning an Example
? When a robot welder is in adjustment,its mean
time to perform its task is 1.3250 minutes,Past
experience has found the standard deviation of
the cycle time to be 0.0396 minutes,An
incorrect mean operating time can disrupt the
efficiency of other activities along the
production line,For a recent random sample
of 80 jobs,the mean cycle time for the welder
was 1.3229 minutes,Does the machine appear
to be in need of adjustment?
? 2002 The Wadsworth Group
Building Hypotheses
? What decision is to be made?
– The robot welder is in adjustment.
– The robot welder is not in adjustment.
? How will we decide?
–,In adjustment” means μ = 1.3250 minutes.
–,Not in adjustment” means μ ? 1.3250 minutes.
? Which requires a change from business as
usual? What triggers new action?
– Not in adjustment - H1,μ ? 1.3250 minutes
? 2002 The Wadsworth Group
Types of Error
No error
Type II
error:
b
Type I
error:
a
No error
State of Reality
H0 True H0 False
H0
True
H0
False
Test
Says
? 2002 The Wadsworth Group
Types of Error
? Type I Error:
– Saying you reject H0 when it really is true.
– Rejecting a true H0.
? Type II Error:
– Saying you do not reject H0 when it really is
false.
– Failing to reject a false H0.
? 2002 The Wadsworth Group
Acceptable Error for the Example
? Decision makers frequently use a 5%
significance level,
– Use a = 0.05.
– An a-error means that we will decide to adjust
the machine when it does not need adjustment.
– This means,in the case of the robot welder,if
the machine is running properly,there is only
a 0.05 probability of our making the mistake of
concluding that the robot requires adjustment
when it really does not.
? 2002 The Wadsworth Group
The Null Hypothesis
? Nondirectional,two-tail test:
– H0,pop parameter = value
? Directional,right-tail test:
– H0,pop parameter ? value
? Directional,left-tail test:
– H0,pop parameter ? value
Always put hypotheses in terms of
population parameters,H0 always gets,=“.
? 2002 The Wadsworth Group
Nondirectional,Two-Tail Tests
H0,pop parameter = value
H1,pop parameter ? value
a? ? a? ???a
杬 +z
Do Not
Rejec t H
0
00
Rejec t HRejec t H
? 2002 The Wadsworth Group
Directional,Right-Tail Tests
H0,pop parameter ? value
H1,pop parameter > value
a??a
+z
Do Not Re ject H
00
Rejec t H
? 2002 The Wadsworth Group
Directional,Left-Tail Tests
H0,pop parameter ? value
H1,pop parameter < value
a
??a
杬
Do Not Re ject H
0
Rejec t H
0
? 2002 The Wadsworth Group
The Logic of Hypothesis Testing
? Step 1.
A claim is made.
? A new claim is asserted
that challenges existing
thoughts about a population
characteristic.
– Suggestion,Form the
alternative hypothesis first,
since it embodies the
challenge.
? 2002 The Wadsworth Group
The Logic of Hypothesis Testing
? Step 2.
How much
error are you
willing to
accept?
? Select the maximum acceptable
error,a,The decision maker
must elect how much error
he/she is willing to accept in
making an inference about the
population,The significance
level of the test is the maximum
probability that the null
hypothesis will be rejected
incorrectly,a Type I error.
? 2002 The Wadsworth Group
The Logic of Hypothesis Testing
? Step 3.
If the null
hypothesis
were true,what
would you
expect to see?
? Assume the null hypothesis is
true,This is a very powerful
statement,The test is always
referenced to the null
hypothesis.
Form the rejection region,the
areas in which the decision
maker is willing to reject the
presumption of the null
hypothesis.
? 2002 The Wadsworth Group
The Logic of Hypothesis Testing
? Step 4.
What did you
actually see?
? Compute the sample statistic,
The sample provides a set of
data that serves as a window
to the population,The
decision maker computes the
sample statistic and calculates
how far the sample statistic
differs from the presumed
distribution that is established
by the null hypothesis.
? 2002 The Wadsworth Group
The Logic of Hypothesis Testing
? Step 5.
Make
the
decision.
? The decision is a conclusion supported
by evidence,The decision maker will:
– reject the null hypothesis if the sample
evidence is so strong,the sample statistic so
unlikely,that the decision maker is
convinced H1 must be true.
– fail to reject the null hypothesis if the
sample statistic falls in the nonrejection
region,In this case,the decision maker is
not concluding the null hypothesis is true,
only that there is insufficient evidence to
dispute it based on this sample.
? 2002 The Wadsworth Group
The Logic of Hypothesis Testing
? Step 6.
What are the
implications
of the
decision for
future
actions?
? State what the decision means in
terms of the business situation.
The decision maker must draw out
the implications of the decision,Is
there some action triggered,some
change implied? What
recommendations might be
extended for future attempts to
test similar hypotheses?
? 2002 The Wadsworth Group
Hypotheses for the Example
? The hypotheses are:
– H0,μ= 1.3250 minutes
The robot welder is in adjustment.
– H1,μ? 1.3250 minutes
The robot welder is not in adjustment.
? This is a nondirectional,two-tail test.
? 2002 The Wadsworth Group
Identifying the Appropriate Test
Statistic
Ask the following questions:
? Are the data the result of a measurement
(a continuous variable) or a count (a
discrete variable)?
? Is s known?
? What shape is the distribution of the
population parameter?
? What is the sample size?
? 2002 The Wadsworth Group
Continuous Variables
? Continuous data are the result of a
measurement process,Each element of the
data set is a measurement representing one
sampled individual element.
– Test of a mean,μ
?Example,When a robot welder is in adjustment,its
mean time to perform its task is 1.3250 minutes,For
a recent sample of 80 jobs,the mean cycle time for
the welder was 1.3229 minutes.
?Note that time to complete each of the 80 jobs was
measured,The sample average was computed.
? 2002 The Wadsworth Group
Test of μ,s Known,Population
Normally Distributed
? Test Statistic:
– where
? is the sample statistic.
? μ0 is the value identified in the null hypothesis.
? s is known.
? n is the sample size.
n
xz
s 0
–m=
x
? 2002 The Wadsworth Group
Test of μ,s Known,Population
Shape Not Known/Not Normal
? If n ? 30,Test Statistic:
? If n < 30,use a distribution-free test (see
Chapter 13).
n
xz
s 0
–m=
? 2002 The Wadsworth Group
Test of μ,s Unknown,Population
Normally Distributed
? Test Statistic:
– where
? is the sample statistic.
? μ0 is the value identified in the null hypothesis.
? s is unknown.
? n is the sample size
? degrees of freedom on t are n – 1.
x
x–m
ns
t 0=
? 2002 The Wadsworth Group
Test of μ,s Unknown,Population
Shape Not Known/Not Normal
? If n ? 30,Test Statistic:
? If n < 30,use a distribution-free test (see
Chapter 14).
t =
x – m
0s
n
? 2002 The Wadsworth Group
The Formal Hypothesis Test for
the Example,s Known
? I,Hypotheses
– H0,μ= 1.3250 minutes
– H1,μ? 1.3250 minutes
? II,Rejection Region
– a = 0.05
Decision Rule:
If z < – 1.96 or z > 1.96,
reject H0.
a? ? a? ???a
z=-1,96 z=+1.9 6
Do Not
Rejec t H
0
00
Rejec t HRejec t H
? 2002 The Wadsworth Group
The Formal Hypothesis Test,cont.
? III,Test Statistic
? IV,Conclusion
Since the test statistic of z = – 0.47 fell
between the critical boundaries of
z = ± 1.96,we do not reject H0 with at
least
95% confidence or at most 5% error.
47.0–00443.0 0021.0–
80
0396.0
3250.1–3229.10– ===m=
n
xz
s
? 2002 The Wadsworth Group
The Formal Hypothesis Test,cont.
? V,Implications
This is not sufficient evidence to
conclude that the robot welder is out of
adjustment.
? 2002 The Wadsworth Group
Discrete Variables
? Discrete data are the result of a counting
process,The sampled elements are
sorted,and the elements with the
characteristic of interest are counted.
–Test of a proportion,p
?Example,The career services director of Hobart
University has said that 70% of the school’s seniors
enter the job market in a position directly related
to their undergraduate field of study,In a sample
of 200 of last year’s graduates,132 or 66% have
entered jobs related to their field of study.
? 2002 The Wadsworth Group
Test of p,Sample Sufficiently
Large
? If both n p? 5 and n(1 –p) ? 5,
Test Statistic:
– where p = sample proportion
– p0 is the value identified in the null hypothesis.
– n is the sample size.
z =
p – p
0
p
0
(1 – p
0
)
n
? 2002 The Wadsworth Group
Test of p,Sample Not Sufficiently
Large
? If either n p < 5 or n(1 –p) < 5,convert
the proportion to the underlying
binomial distribution.
? Note there is no t-test on a population
proportion.
? 2002 The Wadsworth Group
Observed Significance Level
? A p-value is:
– the exact level of significance of the test statistic.
– the smallest value a can be and still allow us to reject
the null hypothesis.
– the amount of area left in the tail beyond the test
statistic for a one-tailed hypothesis test or
– twice the amount of area left in the tail beyond the test
statistic for a two-tailed test.
– the probability of getting a test statistic from another
sample that is at least as far from the hypothesized
mean as this sample statistic is.
? 2002 The Wadsworth Group
Hypothesis Testing,One Population
Mean or Proportion
to accompany
Introduction to Business Statistics
fourth edition,by Ronald M,Weiers
Presentation by Priscilla Chaffe-Stengel
Donald N,Stengel
? 2002 The Wadsworth Group
Chapter 10 - Learning Objectives
? Describe the logic of and transform verbal
statements into null and alternative hypotheses.
? Describe what is meant by Type I and Type II
errors.
? Conduct a hypothesis test for a single population
mean or proportion.
? Determine and explain the p-value of a test
statistic.
? Explain the relationship between confidence
intervals and hypothesis tests.
? 2002 The Wadsworth Group
Null and Alternative Hypotheses
? Null Hypotheses
– H0,Put here what is typical of the population,
a term that characterizes,business as usual”
where nothing out of the ordinary occurs.
? Alternative Hypotheses
– H1,Put here what is the challenge,the view of
some characteristic of the population that,if it
were true,would trigger some new action,
some change in procedures that had
previously defined,business as usual.”
? 2002 The Wadsworth Group
Beginning an Example
? When a robot welder is in adjustment,its mean
time to perform its task is 1.3250 minutes,Past
experience has found the standard deviation of
the cycle time to be 0.0396 minutes,An
incorrect mean operating time can disrupt the
efficiency of other activities along the
production line,For a recent random sample
of 80 jobs,the mean cycle time for the welder
was 1.3229 minutes,Does the machine appear
to be in need of adjustment?
? 2002 The Wadsworth Group
Building Hypotheses
? What decision is to be made?
– The robot welder is in adjustment.
– The robot welder is not in adjustment.
? How will we decide?
–,In adjustment” means μ = 1.3250 minutes.
–,Not in adjustment” means μ ? 1.3250 minutes.
? Which requires a change from business as
usual? What triggers new action?
– Not in adjustment - H1,μ ? 1.3250 minutes
? 2002 The Wadsworth Group
Types of Error
No error
Type II
error:
b
Type I
error:
a
No error
State of Reality
H0 True H0 False
H0
True
H0
False
Test
Says
? 2002 The Wadsworth Group
Types of Error
? Type I Error:
– Saying you reject H0 when it really is true.
– Rejecting a true H0.
? Type II Error:
– Saying you do not reject H0 when it really is
false.
– Failing to reject a false H0.
? 2002 The Wadsworth Group
Acceptable Error for the Example
? Decision makers frequently use a 5%
significance level,
– Use a = 0.05.
– An a-error means that we will decide to adjust
the machine when it does not need adjustment.
– This means,in the case of the robot welder,if
the machine is running properly,there is only
a 0.05 probability of our making the mistake of
concluding that the robot requires adjustment
when it really does not.
? 2002 The Wadsworth Group
The Null Hypothesis
? Nondirectional,two-tail test:
– H0,pop parameter = value
? Directional,right-tail test:
– H0,pop parameter ? value
? Directional,left-tail test:
– H0,pop parameter ? value
Always put hypotheses in terms of
population parameters,H0 always gets,=“.
? 2002 The Wadsworth Group
Nondirectional,Two-Tail Tests
H0,pop parameter = value
H1,pop parameter ? value
a? ? a? ???a
杬 +z
Do Not
Rejec t H
0
00
Rejec t HRejec t H
? 2002 The Wadsworth Group
Directional,Right-Tail Tests
H0,pop parameter ? value
H1,pop parameter > value
a??a
+z
Do Not Re ject H
00
Rejec t H
? 2002 The Wadsworth Group
Directional,Left-Tail Tests
H0,pop parameter ? value
H1,pop parameter < value
a
??a
杬
Do Not Re ject H
0
Rejec t H
0
? 2002 The Wadsworth Group
The Logic of Hypothesis Testing
? Step 1.
A claim is made.
? A new claim is asserted
that challenges existing
thoughts about a population
characteristic.
– Suggestion,Form the
alternative hypothesis first,
since it embodies the
challenge.
? 2002 The Wadsworth Group
The Logic of Hypothesis Testing
? Step 2.
How much
error are you
willing to
accept?
? Select the maximum acceptable
error,a,The decision maker
must elect how much error
he/she is willing to accept in
making an inference about the
population,The significance
level of the test is the maximum
probability that the null
hypothesis will be rejected
incorrectly,a Type I error.
? 2002 The Wadsworth Group
The Logic of Hypothesis Testing
? Step 3.
If the null
hypothesis
were true,what
would you
expect to see?
? Assume the null hypothesis is
true,This is a very powerful
statement,The test is always
referenced to the null
hypothesis.
Form the rejection region,the
areas in which the decision
maker is willing to reject the
presumption of the null
hypothesis.
? 2002 The Wadsworth Group
The Logic of Hypothesis Testing
? Step 4.
What did you
actually see?
? Compute the sample statistic,
The sample provides a set of
data that serves as a window
to the population,The
decision maker computes the
sample statistic and calculates
how far the sample statistic
differs from the presumed
distribution that is established
by the null hypothesis.
? 2002 The Wadsworth Group
The Logic of Hypothesis Testing
? Step 5.
Make
the
decision.
? The decision is a conclusion supported
by evidence,The decision maker will:
– reject the null hypothesis if the sample
evidence is so strong,the sample statistic so
unlikely,that the decision maker is
convinced H1 must be true.
– fail to reject the null hypothesis if the
sample statistic falls in the nonrejection
region,In this case,the decision maker is
not concluding the null hypothesis is true,
only that there is insufficient evidence to
dispute it based on this sample.
? 2002 The Wadsworth Group
The Logic of Hypothesis Testing
? Step 6.
What are the
implications
of the
decision for
future
actions?
? State what the decision means in
terms of the business situation.
The decision maker must draw out
the implications of the decision,Is
there some action triggered,some
change implied? What
recommendations might be
extended for future attempts to
test similar hypotheses?
? 2002 The Wadsworth Group
Hypotheses for the Example
? The hypotheses are:
– H0,μ= 1.3250 minutes
The robot welder is in adjustment.
– H1,μ? 1.3250 minutes
The robot welder is not in adjustment.
? This is a nondirectional,two-tail test.
? 2002 The Wadsworth Group
Identifying the Appropriate Test
Statistic
Ask the following questions:
? Are the data the result of a measurement
(a continuous variable) or a count (a
discrete variable)?
? Is s known?
? What shape is the distribution of the
population parameter?
? What is the sample size?
? 2002 The Wadsworth Group
Continuous Variables
? Continuous data are the result of a
measurement process,Each element of the
data set is a measurement representing one
sampled individual element.
– Test of a mean,μ
?Example,When a robot welder is in adjustment,its
mean time to perform its task is 1.3250 minutes,For
a recent sample of 80 jobs,the mean cycle time for
the welder was 1.3229 minutes.
?Note that time to complete each of the 80 jobs was
measured,The sample average was computed.
? 2002 The Wadsworth Group
Test of μ,s Known,Population
Normally Distributed
? Test Statistic:
– where
? is the sample statistic.
? μ0 is the value identified in the null hypothesis.
? s is known.
? n is the sample size.
n
xz
s 0
–m=
x
? 2002 The Wadsworth Group
Test of μ,s Known,Population
Shape Not Known/Not Normal
? If n ? 30,Test Statistic:
? If n < 30,use a distribution-free test (see
Chapter 13).
n
xz
s 0
–m=
? 2002 The Wadsworth Group
Test of μ,s Unknown,Population
Normally Distributed
? Test Statistic:
– where
? is the sample statistic.
? μ0 is the value identified in the null hypothesis.
? s is unknown.
? n is the sample size
? degrees of freedom on t are n – 1.
x
x–m
ns
t 0=
? 2002 The Wadsworth Group
Test of μ,s Unknown,Population
Shape Not Known/Not Normal
? If n ? 30,Test Statistic:
? If n < 30,use a distribution-free test (see
Chapter 14).
t =
x – m
0s
n
? 2002 The Wadsworth Group
The Formal Hypothesis Test for
the Example,s Known
? I,Hypotheses
– H0,μ= 1.3250 minutes
– H1,μ? 1.3250 minutes
? II,Rejection Region
– a = 0.05
Decision Rule:
If z < – 1.96 or z > 1.96,
reject H0.
a? ? a? ???a
z=-1,96 z=+1.9 6
Do Not
Rejec t H
0
00
Rejec t HRejec t H
? 2002 The Wadsworth Group
The Formal Hypothesis Test,cont.
? III,Test Statistic
? IV,Conclusion
Since the test statistic of z = – 0.47 fell
between the critical boundaries of
z = ± 1.96,we do not reject H0 with at
least
95% confidence or at most 5% error.
47.0–00443.0 0021.0–
80
0396.0
3250.1–3229.10– ===m=
n
xz
s
? 2002 The Wadsworth Group
The Formal Hypothesis Test,cont.
? V,Implications
This is not sufficient evidence to
conclude that the robot welder is out of
adjustment.
? 2002 The Wadsworth Group
Discrete Variables
? Discrete data are the result of a counting
process,The sampled elements are
sorted,and the elements with the
characteristic of interest are counted.
–Test of a proportion,p
?Example,The career services director of Hobart
University has said that 70% of the school’s seniors
enter the job market in a position directly related
to their undergraduate field of study,In a sample
of 200 of last year’s graduates,132 or 66% have
entered jobs related to their field of study.
? 2002 The Wadsworth Group
Test of p,Sample Sufficiently
Large
? If both n p? 5 and n(1 –p) ? 5,
Test Statistic:
– where p = sample proportion
– p0 is the value identified in the null hypothesis.
– n is the sample size.
z =
p – p
0
p
0
(1 – p
0
)
n
? 2002 The Wadsworth Group
Test of p,Sample Not Sufficiently
Large
? If either n p < 5 or n(1 –p) < 5,convert
the proportion to the underlying
binomial distribution.
? Note there is no t-test on a population
proportion.
? 2002 The Wadsworth Group
Observed Significance Level
? A p-value is:
– the exact level of significance of the test statistic.
– the smallest value a can be and still allow us to reject
the null hypothesis.
– the amount of area left in the tail beyond the test
statistic for a one-tailed hypothesis test or
– twice the amount of area left in the tail beyond the test
statistic for a two-tailed test.
– the probability of getting a test statistic from another
sample that is at least as far from the hypothesized
mean as this sample statistic is.
? 2002 The Wadsworth Group
