Department of Business Administration Page.

Assignment NO. 2
Business Mathematics and Statistical (MBA-5528)

Topic: ESTEMATION AND HYPOTHESIS TESTING

Submitted to: Sir Aftab Ahmad khan

Submitted by: Faizullah khan
Roll no. AH-522997 cell (0346-9175441)

Alama Iqbal Open University Islamabad

Department of Business Administration Page.2

ACKNOWLEDGEMENT

All praises to Almighty Allah, the most Gracious, the most

Beneficent and the most Merciful, who enabled me to
complete this assignment.

I feel great pleasure in expressing my since gratitude to my

teacher, for his guidance and support for providing me an
opportunity to complete a productive research study of my
topic

“Estimation and hypothesis testing”

My special thanks and acknowledgments to Mr.Sarfaraz for
providing me all relative information, guidance and support
to compile the practical study of Engro food (pvt)

I will keep my hopes alive for the success of given task to

submit this report to my honorable teacher Sir Aftab
Ahmad Khan whose guidance; support and encouragement
enable me to complete this assignment.

Alama Iqbal Open University Islamabad

Department of Business Administration Page.3

EXECUTIVE SUMMARY
This assignment is a research-oriented activity,
which represents both the theoretical and practical
implication of the topic. In the first section of this
assignment, I explain the theoretical aspect of the
topic and all major parts has been explained which
are involved in the method of for “Estimation and
Hypothesis testing “For empirical study, I select
Engro food company.

Alama Iqbal Open University Islamabad

Department of Business Administration Page.4

Table of Contents Page No

Title page 01

Acknowledgement 03

Abstract 04

Table of contents 05

Introduction to the issue 06

Case study 9

Data collection methods 17

Alama Iqbal Open University Islamabad

Department of Business Administration Page.5

Introduction to the topic.

Statistics:

"By statistics we mean aggregate of facts affected to a marked

extent by multiplicity of causes, numerically expressed, enumerated or
estimated according to reasonable standard of accuracy, collected in a
systematic manner for a predetermined purpose and placed in relation
to each other."

This definition gives all the characteristics of statistics which

are

(1) Aggregate of facts

(2) Affected by multiplicity of causes

(3) Numerically expressed

(4) Estimated according to reasonable standards of

accuracy

(5) Collected in a systematic manner

(6) Collected for a predetermined purpose

(7) Placed in relation to each other.

Stages in a statistical investigation:

1) Collection of data

Alama Iqbal Open University Islamabad

Department of Business Administration Page.6

2) Presentation of data
3) Analysis of data
4) Interpretation of data

Alama Iqbal Open University Islamabad

Department of Business Administration Page.7

After the collection of data and performing the statistic

procedure upon the raw data, it has become secondary data
which has become information and is useful for the user.
The user of this data uses it to estimate about the parameter
of the concern population, this procedure and stage of
statistic collection is called estimation.

n statistics, estimation refers to the process by which one

makes inferences about a population, based on information
obtained from a sample.

Point Estimate vs. Interval Estimate:

Statisticians use sample statistics to estimate population parameters.
For example, sample means are used to estimate population means; sample
proportions, to estimate population proportions.

An estimate of a population parameter may be expressed in two ways:

• Point estimate. A point estimate of a population parameter is a single

value of a statistic. For example, the sample mean x is a point estimate
of the population mean μ. Similarly, the sample proportion p is a point
estimate of the population proportion P.

• Interval estimate. An interval estimate is defined by two numbers,

between which a population parameter is said to lie. For example, a <
x < b is an interval estimate of the population mean μ. It indicates that
the population mean is greater than a but less than b.

Alama Iqbal Open University Islamabad

Department of Business Administration Page.8

Confidence Intervals

Statisticians use a confidence interval to express the precision and

uncertainty associated with a particular sampling method. A confidence
interval consists of three parts.

1. A confidence level.
2. A statistic.
3. A margin of error.

The confidence level describes the uncertainty of a sampling method. The

statistic and the margin of error define an interval estimate that describes the
precision of the method. The interval estimate of a confidence interval is
defined by the sample statistic + margin of error.

For example, we might say that we are 95% confident that the true
population mean falls within a specified range. This statement is a
confidence interval. It means that if we used the same sampling method to
select different samples and compute different interval estimates, the true
population mean would fall within a range defined by the sample statistic +
margin of error 95% of the time.

Confidence intervals are preferred to point estimates, because confidence

intervals indicate (a) the precision of the estimate and (b) the uncertainty of
the estimate.

Alama Iqbal Open University Islamabad

Department of Business Administration Page.9

Confidence Level

The probability part of a confidence interval is called a confidence level. The

confidence level describes how strongly we believe that a particular
sampling method will produce a confidence interval that includes the true
population parameter.

Here is how to interpret a confidence level. Suppose we collected many

different samples, and computed confidence intervals for each sample. Some
confidence intervals would include the true population parameter; others
would not. A 95% confidence level means that 95% of the intervals contain
the true population parameter; a 90% confidence level means that 90% of the
intervals contain the population parameter; and so on.

Margin of Error

In a confidence interval, the range of values above and

below the sample statistic is called the margin of error.

For example, suppose the local newspaper conducts an

election survey and reports that the independent candidate
will receive 30% of the vote. The newspaper states that the
survey had a 5% margin of error and a confidence level of
95%. These findings result in the following confidence
interval: We are 95% confident that the independent
candidate will receive between 25% and 35% of the vote.

Alama Iqbal Open University Islamabad

Department of Business Administration Page.10

Note: Many public opinion surveys report interval estimates,

but not confidence intervals. They provide the margin of
error, but not the confidence level. To clearly interpret
survey results you need to know both! We are much more
likely to accept survey findings if the confidence level is high
(say, 95%) than if it is low (say, 50%).

Testing of Hypothesis

For testing a hypothesis:

Many a time, we strongly believe some results to be true. but after

taking a sample, we notice that one sample data does not wholly support the
result. The difference is due to

(i) the original belief being wrong and

(ii) the sample being slightly one sided.

Tests are therefore, needed to distinguish between the two possibilities.

These tests tells about the likely possibilities and reveal whether or not the
difference can be due to chance elements. If the difference is not due to
chance elements it is significant and therefore, these tests are called tests of
significance. The whole procedure is known is Testing of Hypothesis.

A hypothesis is a statement supposed to be true till it is proved false. It may

be based on previous experience or may be derived theoretically. First a
statistician or the investigator forms a research hypothesis that an exception
is to be tested. Then he derives a statement which is opposite the research
hypothesis (noting as Ho). The approach here is to set up an assumption that

Alama Iqbal Open University Islamabad

Department of Business Administration Page.11

there is no contraction between the believed result and the sample result and
that the difference therefore can be ascribed solely to chance. Such a
hypothesis is called a null hypothesis ( Ho). It is the null hypothesis that is
actually tested, not the research hypothesis. The object of the test is to see
whether the null hypothesis should be rejected or accepted.

If the null hypothesis is rejected, that is taken as evidence in favor of

the research hypothesis which is called as the alternative hypothesis (denoted
by Ha). In usual practice we do not say that the research hypothesis has been
"proved" only that it has been supported.

For example, if it is assumed that the mean of the weights of the

population of a college is 110 lb, then the null hypothesis will be the mean of
the population that is 110 lbs. i.e. Ho : m = 110 lbs ( Null hypothesis ). In
terms of alternative hypothesis (i) H α : µ α ≠ 110 lbs (ii) Hα : µ α >
110 lbs (iii) Hα : µ α < 110 lbs.

Setting up levels of significance:

Once the null hypothesis is set up, the next job is to set the limits within
which we expect (the null hypothesis) m lies. The idea behind it is to ensure
that the difference between the sample value and the hypothesis should arise
due to sampling fluctuations alone. If this difference does not exceeds this
limit then the sample supports the null hypothesis and the sample is
accepted. If it exceeds this limit the sample does not support the hypothesis
and it is rejected.

Alama Iqbal Open University Islamabad

Department of Business Administration Page.12

Now fixing the limits totally depends upon the accuracy desired. Generally
the limits are fixed such that the probability that the difference will exceeds
the limits is 0.05 or 0.01. These levels are known as the 'levels of
significance' and are expressed as 5% or 1% levels of significance. Rejection
of null hypothesis does not mean that the hypothesis is disproved.

It simply means that the sample values does not support the hypothesis.
Also, acceptance does not mean that the hypothesis is proved. It means
simply it is being supported.

Confidence limits

The limits (or range) within which the hypothesis should lie with specified
probabilities are called the confidence limits or fiducial limits. It is
customary to take these limits as 5% or 1% levels of significance. If sample
values lies between the confidence limits, the hypothesis is accepted; if it
does not, the hypothesis is rejected at the specified level of significance.

Errors in Testing Of Hypothesis

In testing any hypothesis, we get only two results: either we

accept or we reject it. We do not know whether it is true or
false. Hence four possibilities may arise.

The hypothesis is true but test rejects it (Type I error)

The hypothesis is false but test accepts it (Type II error)

The hypothesis is true and test accepts it (correct decision)

Alama Iqbal Open University Islamabad

Department of Business Administration Page.13

The hypothesis is false and test rejects it (correct decision)

In a statistical hypothesis testing experiment there are two

types of errors which could occur which are detailed below:-.

Type I error:
Is committed when the null hypothesis is rejected though it is true. In
terms of probability, Type I error is denoted by α (alpha) where

α = probability of type I error

α = probability (rejecting Hο / Hα is true).

A Type II error:

is committed by not rejecting ( i.e. accepting) the null

hypothesis, when it is false. The probability of Type II error is
denoted by  (beta) where

β= probability of Type - II error

β = probability (accepting Ho / H is false)

Alama Iqbal Open University Islamabad

Department of Business Administration Page.14

Now supposes Murray, a manufacturer produces some

type of articles of good quality. A purchaser by chance
selects a sample randomly. It so happens that the sample
contains many defective articles and it leads the purchaser
to reject the whole product. Now, Murray suffers a loss even
though he has produced a good article of quality. Therefore,
this Type I error is called "producers risk".

On the other hand, if we accept the entire lot on the basis of

a sample and the lot is not really good, the consumers are
put in loss. Therefore, this Type II error is called the
"consumers risk".

In practical situations, still other aspects are considered

while accepting or rejecting a lot. The risks involved for both
producer and consumer are compared. Then Type I and Type
II errors are fixed; and a decision is reached.

Type of testing

Two tail teste

The two-tailed test is a statistical test used in

inference, in which a given statistical hypothesis, H0
(the null hypothesis), will be rejected when the value
of the test statistic is either sufficiently small or
sufficiently large. This contrasts with a one-tailed

Alama Iqbal Open University Islamabad

Department of Business Administration Page.15

test, in which only one of the rejection regions

"sufficiently small" or "sufficiently large" is reselected
according to the alternative hypothesis being
selected, and the hypothesis is rejected only if the
test statistic satisfies that criterion. Alternative
names are one-sided and two-sided tests.

Suppose µ = 1 0

true hypothesis

H0: µ = 10

Η1 : µ is not equal to 10

There are tow type of tow tail test.

Alama Iqbal Open University Islamabad

Department of Business Administration Page.16

 Right tail test

H0:. µ ≥10

H1:. µ <10

 Left tail teste

Right tail test.

H0:. µ ≤10

H1:. µ >10

The reason of Z-test and T- test

Z-test T-test
Σ is known Σ is un- know then
n<30
Sample size >30

Alama Iqbal Open University Islamabad

Department of Business Administration Page.17

EngroFood s’ History
Engro Foods (Pvt.) Limited (EFL) has been
established in 2005 as part of a diversification
process at the Engro Group. The plant located at
Sukkur on 23 acre land, has the raw milk reception
capability of 300,000 liters per day and UHT milk
capacity of 200,000liters per day. The plant has been
established at a cost of Rs. 1 billion which provides
direct employment to 750 people. Engro Foods has
entered the Food business through milk processing
and sale with the company’s vision to pursue growth
opportunities based on country fundamentals and
own strength. It also positions the company to
leverage its corporate social responsibility initiatives
and work closely with rural communities to promote
integrated farming and livestock development. This
effort is expected to play a pivotal role in poverty
alleviation and improving livelihoods of the poor in
the milk collection areas.

Vision

Alama Iqbal Open University Islamabad

Department of Business Administration Page.18

"Our vision is to become a fast expanding mega

foods company. To achieve our vision, the company
will initially focus on dairy by investing a substantial
amount in plant, milk collection capability and
marketing. We are making concrete efforts to expand
in and beyond Pakistan; through strategic
international alliances, to eventually become global."

Engro Food

Brands:
 Olper’s milk

 Olper’s cream

 Olwell

 Skim milk

 Tarang

 Tea milk

Olper’s
Olper’s –A well known brand of Engro Foods (Pvt.) Ltd.

Alama Iqbal Open University Islamabad

Department of Business Administration Page.19

Commercially launched in March 2006

Research Questions
Q1. What is the extent to which Olper’s advertisement?
campaign has created a positioning for the product that was
desired by management?

Q2. Which one is the most effective TV channel to reach the

consumer and what is the effectiveness of the channels being
currently used?

Research Objective
 To identify the acceptability and perception of Packaged milk
brands

 To identify the brand Appeal of consumers towards Olper’s

 To discover the preferences of time and channels of TV

viewers

 To identify the impact of Olper’s Advertisement on

Consumer Perception

Research Design
 Questionnaire

 Questions correspond to the objectives

Alama Iqbal Open University Islamabad

Department of Business Administration Page.20

 Likert scale was utilized to give quantitative results for

positioning statements

 Perception of Packaged Milk Brands

 Reliability of questions was assured

Observational Study
 TV Channels watched GEO news, GEO entertainment, ARY
Digital and PTV Network
 Time watched: 4 pm to 12 pm during Weekend

Sampling criteria

 Sample size: 200

 Limited due to time constraints

 Assigned by Course Instructor

Sample Unit: Individual

 Household

Sampling Design

 Stratified Sampling

 Demographics of Sample

 Housewives 22

Alama Iqbal Open University Islamabad

Department of Business Administration Page.21

 35 years old

 SEC A1, A2 and B

Perception of Packaged Milk

Market share

Alama Iqbal Open University Islamabad

Department of Business Administration Page.22

Market Share of all Brand

Quality

Quality Perception
Quality perception of the brand

Alama Iqbal Open University Islamabad

Department of Business Administration Page.23

Perception of the Packaging

TV viewing habits

 TV viewing habits of the Target Audience:

 Hours spent daily on watching TV

 30 minutes on average

 Timeslots patterns for watching TV Duration

Duration %
0-10 minutes 10

Alama Iqbal Open University Islamabad

Department of Business Administration Page.24

11-30 minutes 34
31-60 minutes 42
1-3 hours 12
More then 3 hours 2

Programs and AD
TV Programs watched by Target Market

 Specific programs in tandem with Advertisement to intensify

recall level

 Marina Morning, Nadia Khan Show, Cooking with Raha

Indian Soaps

 Advertisements remembered : Telenor, ZONG, Tapal,

 Olper’s, Ufone, Cooking Oil etc
Central idea
 Central Idea of Ad

 Moments of Happiness and enjoyment are incomplete

without Olper’s

 Olper’s is a brand for Optimistic people

Hypothesis 01

Ho: Olper’s has been ineffective in establishing its desired

positioning μo≤ 2

Alama Iqbal Open University Islamabad

Department of Business Administration Page.25

 Ha: Olper’s has been effective in establishing its desired

positioning μa> 2

Conclusion

 Null hypothesis is rejected

 At 10% significance level, the sample provides sufficient

evidence to conclude that since the mean is greater than 2,
therefore, Olper’s has been successful in establishing its
overall positioning.

Hypothesis 02
Ho: Olper’s media planning has been ineffective
Po≤50%•
Ha: Olper’s media planning has been effective
Pa>50%
Conclusion
Null hypothesis is rejected

Alama Iqbal Open University Islamabad

Department of Business Administration Page.26

At 5% level of significance; his sample data provides sufficient

evidence to conclude that more than 50% of the respondents have
watched the Ad, therefore, Olper’s media planning has been
effective.

Finding
 Most of the participants watched entertainment
and recipe channels/shows

 Most of the respondents were program specific

watchers e.g. Nadia Khan Show, Cooking with
Rahat.
 The Favorite channels among the participants
were: Geo entertainment, Hum TV, ARY, Aaj TV
& Geo news

Alama Iqbal Open University Islamabad

Department of Business Administration Page.27

 Average Viewing Time 30minutes

 Viewing Time: Most viewed time slots were

09:00 -12:00 and19:00 -22:00.

 Overall positioning has been established to an

extent.

 The Packaging of Olper’s is aligned with the

brand positioning and respondents showed
favorable attitude towards it.

SWOT Analysis
Strengths

1. Engro’s back
Olper’s is a brand of ENGRO foods.
ENGRO foods can easily afford research and
development.
ENGRO can distribute the brand through better
channel

2. PR with farmers

Alama Iqbal Open University Islamabad

Department of Business Administration Page.28

ENGRO has a strong bond and long term relationship

with the farmers who are willing to supply milk to the
company.

Weaknesses
1. Olwell TVC
Olwell ad which is based on Western life style.
Failed to analyze in Pakistan, where practicing
Muslims reside,
Ignoring the ethics, religious beliefs and cultural
values.

2. Owning Red Color.

There is no color association attached to Olper’s.

Opportunities
1. Increased funding by Government
Government has decided to increase farmers’
funding.

2. Increased consumption of PLM

Each competitor in the milk industry wants to
increase penetration of processed liquid milk.

Threats
1 Perception and Price Differentials
Consumers’ perceptions and price differentials can
cause a threat for the company. It is important that
Olper’s comes up to the expectations of the
customers

Alama Iqbal Open University Islamabad

Department of Business Administration Page.29

For example, lose milk is still cheaper than packaged

milk and that is also one factor that people still prefer
to buy lose milk.

2 Competitions
For Olper’s it might be difficult to penetrate in a
market where the loyalties exist for such brands as
Nestle and Haleeb.

Recommendation
 Advertisements should be aired during these
time slots 9am 12am and evening 7pm -10pm

Alama Iqbal Open University Islamabad

Department of Business Administration Page.30

 Proposed Channel weightage for: PTV, Geo

Entertainment, ARY Digital, HUMTV

 Cable movie channels as an alternate Cost

effective platform for mass communication

 Advertisement should be program based rather

than channel based.
 After TV, the widest reach and recall is of
Billboard advertisements

Advertisement Campaign:
1. The packaged milk users appear confused
about the true meaning of Olper’s media
communication

2. Media content must be modified in simpler

terms to reduce difference of brand image
and identity

Alama Iqbal Open University Islamabad

Department of Business Administration Page.31

Reference
From the book
From google.com
From wikipedia

Alama Iqbal Open University Islamabad