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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.
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<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>1)There are various ways of forecasting the amount of the next transaction , like Simple average ...
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