Sales of a small appliance across months. A market research firm supplies manufacturers with estimates of the retail sales of their products from samples of retail stores. Marketing managers are prone to look at the estimate and ignore sampling error. Suppose that an SRS of 70 stores this month shows mean sales of 53 units of a small appliance, with standard deviation 12 units. During the same month last year, an SRS of 55 stores gave mean sales of 50 units, with standard deviation 10 units. An increase from 50 to 53 is a rise of 6%. The marketing manager is happy because sales are up 6%.
(a) Use the two-sample t procedure to give a 95% confidence interval for the difference in mean number of units sold at all retail stores.
(b) Explain in language that the manager can understand why he cannot be certain that sales rose by 6%, and that in fact sales may even have dropped.