Nelson Greene develops real estate in the southwestern United States. His next planned project is to build a housing development on a parcel of land in New Mexico, not far from Santa Fe. However, with the recent decline in housing prices, particularly in areas of the southwest like Las Vegas, Nelson is reconsidering his decision. He set up a meeting with some key individuals, including Tom Barnick, a representative from the township supervisors. Tom and the township council were positive about the proposed development since it would provide increased tax revenue. So Tom wanted to influence Nelson to go forward with the development. Tom had some analysis prepared, which he presented at the meeting. Based on several assumptions, including the probabilities associated with different housing market conditions in New Mexico (improving, worsening, or staying the same), the analysis showed a positive expected payoff for going forward with the project. Tom mentioned that the probabilities were obtained from a small group of housing market experts, although they had difficulty reaching consensus. Nelson noticed that not all the payoffs associated with going forward with the project were positive for each possible market condition, but the positive expected payoff made him view the project more favorably. • Identify the ethical dilemma in this scenario. • What are the undesirable consequences? • Propose an ethical solution that considers the welfare of all stakeholders.
> Just before the peak of the financial crisis, home foreclosures were up 47% in March 2008 compared to the previous year (realestate.msn.com; MSN Real Estate, April 2008). The data show home foreclosure rates (as % change from the previous year) for a sam
> A food company is concerned about recent criticism of the sugar content of their children’s cereals. The data show the sugar content (as a percentage of weight) of several national brands of children’s and adults’ cereals. Are children’s cereals really d
> The owner of a small organic food store was concerned about her sales of a specialty yogurt manufactured in Greece. As a result of increasing fuel costs, she recently had to increase its price. To help boost sales, she decided to place the product on a d
> A company is producing and marketing new reading activities for elementary school children that it believes will improve reading comprehension scores. A researcher randomly assigns third graders to an eight-week program in which some will use these activ
> Whether pasteurized or raw, both the European Economic Council (EEC) and the U.S. Food and Drug Administration (USFDA) require that milk sold to consumers contain no more than 10 coliform bacteria per mL of milk (www.cdfa.ca.gov). Should dairies take thi
> Pole vault technology has evolved considerably since the times of the ancient Greeks and even more recently as new materials have found their way into pole manufacturing. There are currently no regulations on the composition of poles although for safety
> Baseballs used in the major leagues in the United States must adhere to strict standards. One such standard is that the weight must be between 5 and 5.25 ounces. One could look at this standard as a target weight of 5.125 ounces with a tolerance of +/-0.
> “Oil is big business.” A classic example of this is the Texaco-Pennzoil court case, which appeared in the book Making Hard Decisions5 and in a subsequent case study by T. Reilly and N. Sharpe (2001). In 1984, a merger was hammered out between two oil gia
> Baseballs used in the major leagues in the United States must adhere to strict standards. One such standard is that the circumference must be between 9 and 9.25 inch. One could look at this standard as a target circumference of 9.125 inches with a tolera
> The medical facility in Exercise 27 also keeps track of the number of errors found when transcribing information from patient forms. Last year the average number of errors was 1.26 per day which the facility found acceptable. Here are the past two weeks&
> The following data were collected from the number of patient complaints from a small medical service facility over a two-week period. The past year the average number of complaints was 4.57. The management team would like to use that as a baseline for mo
> In LCD screens, every attempt is made to make sure that all pixels illuminate when they receive a signal, but it is impossible to ensure that every pixel in a large screen will actually work. A screen is determined to be defective if more than 2 pixels f
> MediaChip manufactures computer chips specifically for MP3 players. The process uses sophisticated lasers to imprint several hundred chips on a single silicon “wafer.” While the process is completely automated and set
> The following data are from a production process that makes approximately 250 units each hour. The data were collected over a normal 12-hour shift one day. Historical data shows the proportion of defects to be 6.21%. Either use technology to accommodate
> The following data are from a production process that makes 250 units each hour. The data were collected over a normal 12-hour shift one day. The data are shown in the table at the right. Using the first 10 hours as the calibration period, a) Calculate t
> The same graphite manufacturer from Exercise 21 uses an alternative process to make rolls. For this process the data are separated into 10 lanes—a sample consists of one roll from each lane. The results of 25 samples are shown in the table at the top of
> A graphite manufacturer makes long rolls of flexible graphite to be used to seal components in combustion engines. The specifications state that the mean strength should be 21.2 ounces per square yard with a standard deviation of 0.29. Further specificat
> A company that traditionally made rulers and yardsticks is setting up a manufacturing process to make metersticks. Obviously, accuracy is important for their new product. The company runs a 24-hour production process. Using a calibration set of data they
> Consumers always seem to want thinner and lighter electronic products, and computer laptops are no exception. One of the challenges of producing extremely thin and light laptops is the manufacturing of the touch pads. In particular, touch pads are diffic
> A company that makes basketballs has the motto: “Our basketballs are ready to play.” Therefore, it is important to the company that the basketballs are inflated with the proper amount of air when shipped. Most basketba
> The bike shop owner has now done a bit more research and believes that the demand for high-end bikes has shifted, so that now the low demand is 50% likely and the high demand is only 10% likely. How does this change your responses to Exercise 37? Find th
> A bicycle shop owner is deciding which products to stock. His distributor will give him a deal if he buys more of the same kind of bike. The payoff table shows monthly sales for a high-end bike (selling at $950) or a moderately priced bike (selling at $5
> An investor is considering how to invest her money. She has two options—either a domestic mutual fund that only invests in blue chip stocks or an international aggressive mutual fund that invests in young technical firms. The payoff (pr
> An investor is considering adding a stock to her portfolio. Assuming she buys 100 shares, here is an estimated payoff table for the alternative stocks if she holds onto them for six months. The value of the stock depends on whether or not an acquisition
> Aaron’sAir (see Exercises 28, 30, and 32) could purchase a market survey from a firm that has advised the island tourist and conference bureau. He thinks their projections would help him determine whether the probability of high demand might be as high a
> Shawn, of Exercises 27, 29, and 31, could obtain long-range predictions of the growing conditions for next summer. He thinks that those might show a probability of good growing conditions as low as 50% or as high as 80%. If he doesn’t obtain those predic
> Aaron’sAir (see Exercises 28 and 30) estimates that high-demand periods (which depend on the weather and on bookings for conferences) occur with probability .3 and medium demand periods occur with probability .5. The rest are low-demand periods. a) What’
> Shawn Overgrowth, from Exercise 27, estimates that the probability of a good growing season is 0.70. Based on that: a) Find the EV for his actions. b) Find the standard deviations. c) Compute the RRRs. Which action is preferred based on the RRRs?
> An experiment to test a new gasoline additive, Gasplus, was performed on three different cars: a sports car, a minivan, and a hybrid. Each car was tested with both Gasplus and regular gas on 10 different occasions, and their gas mileage was recorded. Her
> In previous chapters we considered what factors might contribute to the price of a home including living area and, such features as whether the home had a fireplace or more than 2 bedrooms. In those analyses, we used correlation and regression and Studen
> The National Highway Transportation Safety Administration runs crash tests in which stock automobiles are crashed into a wall at 35 mph with dummies in both the passenger and the driver’s seats. The THOR Alpha crash dummy is capable of
> We also have data on the protein content on the 77 cereals in Exercise 27. Does protein content vary by shelf? Here’s a boxplot and an ANOVA table. a) What kind of design or study is this? b) What are the null and alternative hypothe
> Supermarkets often place similar types of cereal on the same supermarket shelf. The shelf placement for 77 cereals was recorded as well their sugar content. Does sugar content vary by shelf? Here’s a boxplot and an ANOVA table. (Data in
> Particulate matter is a serious form of air pollution often arising from industrial production. One way to reduce the pollution is to put a filter, or scrubber, at the end of the smokestack to trap the particulates. An experiment to determine which smoke
> An experiment to determine the effect of several methods of preparing cultures for use in commercial yogurt was conducted by a food science research group. Three batches of yogurt were prepared using each of three methods: traditional, ultrafiltration, a
> One way to improve a process is to eliminate non–value-added activities (e.g., extra movements) and wasted effort (e.g., looking for materials). A consultant was hired to improve the efficiency in a large shop f loor operation. She test
> A manufacturing company that makes dental drills was experiencing problems with a specific part on the production line. Management suspected a machining problem that resulted in the length of the part varying outside of target specification. Two factors
> After complaints about gender discrimination regarding bonus incentive pay, a large multinational firm collected data on bonuses awarded during the previous year (% of base pay). Human Resources (HR) randomly sampled male and female managers from three d
> Some people believe that the stock market shows patterns according to the day of the week or the month of the year (“Sell in May and walk away”). We have the closing price of the Dow Jones Industrial Average for every
> To improve the quality of molded parts, companies often test different levels of parameter settings to find the best combinations. Injection molding machines typically have many adjustable parameters. One company used three different mold temperatures (2
> InterCon Travel Health is a Toronto-based company that provides services to health insurers of foreign tourists who travel to the United States and Canada.7 As described in the Guided Example in this chapter, the primary focus of InterCon is to act as an
> Online retailers want customers to trust their websites and want to alleviate any concerns potential customers may have about privacy and security. In a study investigating the factors that affect e-trust, participants were randomly assigned to carry out
> A large financial institution is interested in training its college educated workforce in Six Sigma principles and methods. One part of the training involves basic statistical concepts and tools. Management is considering three approaches: online, tradit
> A pharmaceutical company tested three formulations of a pain relief medicine for migraine headache sufferers. For the experiment, 27 volunteers were selected and 9 were randomly assigned to one of three drug formulations. The subjects were instructed to
> A report released by the Pew Internet & American Life Project entitled The Internet & Consumer Choice focused on current online issues. Respondents were asked to indicate their level of agreement (1 = strongly agree to 4 = strongly disagree) with
> A report released by the Pew Internet & American Life Project entitled The Internet & Consumer Choice focused on current online issues. Respondents were asked to indicate their level of agreement (1 = strongly agree to 4 = strongly disagree) with
> Admiral Oil & Gas Corporation, headquartered in Houston, is the most recognizable of the companies that moved into Pennsylvania to drill for gas from the Marcellus shale formation. While geologists suspected that this formation contained large reserves o
> Trax, one of the leading manufacturers of bicycles in the United States, is interested in expanding its line to include high-end road bikes. One of the features of highend bikes, and one that avid cyclists pay top dollar for, is the use of super-light ca
> With U.S. consumers becoming more environmentally conscious, there has been an explosion of eco-friendly products on the market. One notable entry has been the gas-electric hybrid car. A large nonprofit environmental group would like to target customers
> To shorten the time it takes him to make his favorite pizza, a student designed an experiment to test the effect of sugar and milk on the activation times for baking yeast. Specifically, he tested four different recipes and measured how many seconds it t
> A sample of eight states was selected randomly from each of three regions in the United States (Northeast, Southeast, and West). Mean annual salaries for marketing managers were retrieved from the U.S. Bureau of Labor Statistics (data.bls.gov/oes). The b
> Cell phone adoption rates are available for various countries in the United Nations Database (unstats.un.org). Countries were randomly selected from three regions (Africa, Asia, and Europe), and cell phone adoption (per 100 inhabitants) rates retrieved.
> Refer to Exercise 1. a) State the null and alternative hypotheses. b) Calculate the F-ratio. c) What is the P-value? d) State your conclusion at α = 0.05. Exercise 1: In a completely randomized design, ten subjects were assigned to each of
> In a completely randomized design, ten subjects were assigned to each of four treatments of a factor. Below is the partially completed ANOVA table. a) What are the degrees of freedom for treatment, error, and total? b) What is SSE? c) What is MSTr? d)
> Vendors of hearing aids test them by having patients listen to lists of words and repeat what they hear. The word lists are supposed to be equally difficult to hear accurately. But the challenge of hearing aids is perception when there is background nois
> For the decision tree of Exercise 4, a) Suppose P(Warm) = 0.5, P(Moderate) = 0.3, and P(Cold) = 0.2. What is the expected value of each action? b) What is the best choice using the expected-value approach?
> For the cost matrix of Exercise 3, a) Suppose P(Recession) = 0.2, P1Stable2 = 0.2, and P1Expansion2 = 0.6. What is the expected value of each action? b) What is the best choice using the expected-value approach? Exercise 3: You are called on to decide h
> For the decision tree of Exercise 4, a) What is the maximin choice? b) What is the maximax choice? Exercise 4: Here is a decision tree for the profits (in $000’s) you project for your sales of the cell phone screen defroster, depending
> For the cost matrix of Exercise 3, a) What is the minimax choice? b) What is the minimin choice?
> Here is a decision tree for the profits (in $000’s) you project for your sales of the cell phone screen defroster, depending on the weather this coming winter and your choice of advertising method: Write out the corresponding profit m
> You are called on to decide how your company should produce its new cell phone screen defroster (for use by skiers and others spending time out of doors in the cold.) You develop the following cost matrix ($000’s): Draw the correspond
> Which of the following are Actions and which are States of Nature? a) Whether Unemployment is above or below 10%. b) Whether a new product should be brought to market before or after the beginning of the fiscal year. c) Whether to tell employees to stay
> Which of the following are Actions and which are States of Nature? a) Whether Unemployment is above or below 10%. b) Whether a new product should be brought to market before or after the beginning of the fiscal year. c) Whether to tell employees to stay
> For which one of the following situations would Kendall’s tau be appropriate? a) Comparing the ratings of a new product on a 5-point Likert scale by a panel of consumers to their ratings of a competitor’s product on the same scale. b) Comparing the swe
> For which one of the following situations would a Wilcoxon signed-rank test be appropriate? a) The Mohs scale rates the hardness of minerals. If one mineral can scratch another, it is judged to be harder. (Diamond, the hardest mineral, is a 10.) Is hard
> A bank is studying the average time that it takes 6 of its tellers to serve a customer. Customers line up in the queue and are served by the next available teller. Here is a boxplot of the times it took to serve the last 140 customers. a) What are th
> For which one of the following situations would a Wilcoxon signed-rank test be appropriate? a) Comparing the ratings of a new product on a 5-point Likert scale by a panel of consumers to their ratings of a competitor’s product on the same scale. b) Com
> For which one of the following situations would a Kruskal-Wallis test be appropriate? a) The Mohs scale rates the hardness of minerals. If one mineral can scratch another, it is judged to be harder. (Diamond, the hardest mineral, is a 10.) Is hardness r
> For which one of the following situations would a Kruskal-Wallis test be appropriate? a) Comparing the ratings of a new product on a 5-point Likert scale by a panel of consumers to their ratings of a competitor’s product on the same scale. b) Comparing
> For which one of the following situations would a Wilcoxon rank-sum (or Mann-Whitney) test be appropriate? a) The Mohs scale rates the hardness of minerals. If one mineral can scratch another, it is judged to be harder. (Diamond, the hardest mineral, is
> For which one of the following situations would a Wilcoxon rank-sum (or Mann-Whitney) test be appropriate? a) Comparing the ratings of a new product on a 5-point Likert scale by a panel of consumers to their ratings of a competitor’s product on the same
> Which of the following variables are ranks? For those that are not ranks, give the units. a) U.S. change by size: dime, penny, nickel, quarter, half dollar, dollar. b) U.S. change by value: penny, nickel, dime, quarter, half dollar, dollar. c) The cha
> For which one of the following situations would Kendall’s tau be appropriate? a) The Mohs scale rates the hardness of minerals. If one mineral can scratch another, it is judged to be harder. (Diamond, the hardest mineral, is a 10.) Is hardness related t
> Which of the following variables are ranks? For those that are not ranks, give the units. a) Student ratings of a course on a 5-point Likert scale. b) Students’ letter grades in that course. c) Students’ point scores on the final exam.
> Your manager asked you to fit many models to predict which customers will buy this holiday season. The firm is going to pick only one. What criteria would you recommend that the firm use to evaluate the various models and to compare them?
> Rather than use the proportion of packages that contain defective f loss, another quality control inspector simply counts the number of packages. If historically, only 1 package out of 50 is defective, a) What is the standard deviation of the number of d
> The boxplots from Ex. 24 Chapter 9 display case prices (in dollars) of wine produced by wineries along three of the Finger Lakes in upstate New York. a) What are the null and alternative hypotheses? Talk about prices and location, not symbols. b) Do the
> One of the ways in which the dental f loss discussed in Exercise 5 can fail is if it snaps when pulled with a certain tension. Historically, only 2% of the tested f loss snaps. Suppose boxes of size 50 are selected at random to be tested. a) What is the
> As in Exercise 5, a process to make dental f loss produces spools with a desired mean length of 91.4 m (100 yds). The historical standard deviation is 1 cm (0.01 m). If samples of size 5 are taken and measured, a) What is the center line for the R chart?
> A process to make dental f loss produces spools with a desired mean length of 91.4 m (100 yds). The historical standard deviation is 1 cm (0.01 m). If samples of size 5 are taken and measured, a) What is the standard deviation of the sample mean? b) How
> For the data in Exercise 1, suppose the historical standard deviation had been 0.1 C instead of 0.2 C. How would that change your answers to the questions in Exercise 3?
> For the data in Exercise 1, instead of the specification limits, a) Use the historical standard deviation to set up 1, 2, and 3s limits and draw the control chart. b) Are any points outside the 3s limits on either side? c) Are two of three consecutive po
> A computer screen manufacturing process must produce screens of uniform size. In particular, for a new tablet, the screen should be 10.1 inches long. The engineers have set 10.16 and 10.04 as the upper and lower specifications on screen length. If the ac
> Your manager has read a couple of articles about data mining and artificial intelligence. He wants to use data mining to find the best customers. What would you suggest to structure this problem?
> Your manager learned all about databases, and frequently makes queries such as: “What fraction of our customers who bought a product in the last six months are female and live within 5 miles of the store?” He says that he is data mining. Is he right? Exp
> Your manager is confused by Big Data. Explain what makes “big data” different than “data.”
> A producer of beverage containers wants to ensure that a liquid at 90C will lose no more than 4C after 30 minutes. Containers are selected at random and subjected to testing. Historical data shows the standard deviation to be 0.2C. The quality control te
> These boxplots from Ex. 23 Chapter 9 show the relationship between the number of cylinders in a car’s engine and its fuel economy from a study conducted by a major car manufacturer. a) What are the null and alternative hypotheses? Talk
> Your manager wants to just find and use “the best” model, but you have found that a combined model (boosting) is better. Explain why boosting might help, and why it may be better than trying to find “the best.”
> What are the pros and cons of combining multiple models to produce a prediction? Should we always combine models?
> Your manager wants to use the total accurate classification rate (percent of all cases properly classified) as the metric to evaluate the division’s models. Is this a good idea? Why or why not?
> What are the advantages and disadvantages of using tree vs. neural network models?
> Is any one portion of the CRISP-DM more important than the others? Why?
> For which one of the following situations would Spearman’s rho be appropriate? a) The Mohs scale rates the hardness of minerals. If one mineral can scratch another, it is judged to be harder. (Diamond, the hardest mineral, is a 10.) Is hardness related
> For which one of the following situations would Spearman’s rho be appropriate? a) Comparing the ratings of a new product on a 5-point Likert scale by a panel of consumers to their ratings of a competitor’s product on the same scale. b) Comparing the sw
> For the probabilities of Exercise 8 and the decision tree of Exercise 4, using the expected values found in Exercise 8, compute the standard deviations of the values associated with each action and the corresponding coefficient of variation.
> For the probabilities of Exercise 7 and the cost matrix of Exercise 3, using the expected values you found in Exercise 7, compute the standard deviation of values associated with each action and the corresponding coefficient of variation.
> Cyanoacrylates, the generic name for several compounds with strong adhesive properties, were invented during WWII during experiments to make a special extra-clear plastic suitable for gun sights. They didn’t work for gun sights, however, because they stu
> A company that specializes in developing concrete for construction strives to continually improve the properties of its materials. To increase the compressive strength of one of its new formulations, they varied the amount of alkali content (low, medium,
> For the experiment you designed in the Brief Case of Chapter 9, analyze the results of your experiment and write up your analysis and conclusions, including any recommendations for further testing.
