The shopping behavior of consumers in different types of stores was studied. Data were collected on buying patterns and income levels. A cross-classification table of buying pattern versus income levels for 200 consumers in the sample is reproduced below.
a. State in English the null and alternate hypothesis.
b. For each cell, convert proportions to number of respondents.
c. Compute the test statistic.
d. Compute the critical value at the 0.05 level of significance.
e. Report results of hypothesis testing (e.g., reject ...., and in english)
f. Finally, recommend a targeting strategy for the management of Dillards
STORE VISITED INCOME LEVELS (in thousands of $) Total
MOST FREQUENTLY 20 - 30 30 - 50 Above 50 Respondents
KMART 0.3 0.30 0.125 46
J C PENNEY 0.30 0.30 0.125 46
DILLARDS 0.40 0.40 0.750 108
TOTAL RESPONDENTS 60 60 80 200
Entries in the table are proportions
The solution provides step by step method for the calculation of chi square test for association. Formula for the calculation and Interpretations of the results are also included. Interactive excel sheet is included. The user can edit the inputs and obtain the complete results for a new set of data.