Purchase Solution

Not what you're looking for?

Dick Hoover, owner of Modern Office Equipment, is concerned about freight costs and clerical costs incurred on small orders. In an effort to reduce expenditures in this area, he has decided to introduce a discount policy rewarding orders over \$40 in the hope that this will cause customers to consolidate a number of small orders into large orders. The folloqing data show the amount per transaction for a sample of 28 customers:

\$10, \$15, \$20, \$25, \$15, \$17, \$41, \$50, \$5, \$9, \$12, \$14, \$35, \$18, \$17, \$28, \$29, \$11, \$11, \$43,\$54, \$7
\$8, \$16, \$13, \$18.

Forecast the amount to the next customer transaction.

Average calculated to be: \$21.41
Standard deviation was calculated to be: 13.61351.
Variance was calculated to be 185.3276.

QUESTION: If the policy is successful, will the mean of the distribution increase, decrease or remain unaffected? ANSWER: The goal is to decrease the amount of orders to increase amount of sales to \$40, therefore, the mean of distribution would increase.

Question: If the policy is successful, will the standard deviation increase, decrease or remain unaffected. ANSWER: The standard deviation would increase.

I WOULD LIKE TO KNOW IF MY ANSWERS ARE CORRECT. I WOULD ALSO LIKE ASSISTANCE IN LEARNING HOW TO FORECAST THE AMOUNT OF THE NEXT CUSTOMER TRANSACTION. ALL OF THE CALCULATIONS HAVE TO BE DONE IN EXCEL.

##### Solution Preview

Hi,
<br>
<br>From the data set that has been provided, there are only 26 values and the mean comes to @20.81 and Std dev of 13.51 ( see the attached Excel File).
<br>
<br>1)There are various ways of forecasting the amount of the next transaction , like Simple average ...

Solution provided by:
###### Education
• BE, Bangalore University, India
###### Recent Feedback
• "What does 1 and 0 means in the repair column?"
• "Went through all of the formulas, excellent work! This really helped me!"
• "try others as well please"
• "Thank you, this helped a lot. I was not sure how to plug in those numbers to a formula. This was a great help. Now I have to figure out how to explain cost of capital is used in net present value analysis, and how cost of capital is used in net present value analysis. This stuff gets confusing."

##### Measures of Central Tendency

Tests knowledge of the three main measures of central tendency, including some simple calculation questions.

##### Measures of Central Tendency

This quiz evaluates the students understanding of the measures of central tendency seen in statistics. This quiz is specifically designed to incorporate the measures of central tendency as they relate to psychological research.