Discussion:
Q: A local merchant is interested in obtaining a small business loan to expand his business. He will be able to obtain a more favorable interest rate if he can reasonably demonstrate that his near-term monthly revenues will be between $10,000 and $15,000. He doesn't know the exact level of sales to expect over the next several months, but based on past experience, he knows it should be around $13,000. He also knows that his sales vary by about $2,500 from month to month. What is the probability that his store will generate the revenue required for him to obtain a favorable loan rate?
Use one of the following to address
-Confidence intervals and hypothesis testing
-Decision trees (and their use in solving managerial problems),
-Critical fractile analysis (and its use in determining optimal demand levels),
-Analysis of variance/ANOVA (and its use in understanding differences between group means),
-Chi-square (cross tabs/contingency table) analysis (and its use in determining differences between group proportions),
-Regression, single and multiple (and its use in understanding relationships between dependent and independent (explanatory) variables), and
-Optimization modeling (and its use in determining the best solution given a set of constraint). How to approach this?