Discuss the following:
Q: 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 following 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.
Q1: If the policy is successful, will the mean of the distribution increase, decrease or remain unaffected?
Q2: If the policy is successful, will the standard deviation increase, decrease or remain unaffected.