Among its other features, the OurCampus! website allows customers to purchase OurCampus! LifeStyles merchandise on-line. To handle payment processing, the management of OurCampus! has contracted with the following firms:
i. PayAFriend (PAF) This is an online payment system with which customers and businesses such as OurCampus! register in order to exchange payments in a secure and convenient manner, without the need for a credit card.
ii. Continental Banking Company (Conbanco) This processing services provider allows OurCampus! customers to pay for merchandise using nationally recognized credit cards issued by a financial institution.
To reduce costs, management is considering eliminating one of these two payment systems. However, Lorraine Hildick of the sales department suspects that customers use the two forms of payment in unequal numbers and that customers display different buying behaviors when using the two forms of payment. Therefore, she would like to first determine the following:
i. The proportion of customers using PAF and the proportion of customers using a credit card to pay for their purchases.
ii. The mean purchase amount when using PAF and the mean purchase amount when using a credit card.
Assist Ms. Hildick by preparing an appropriate analysis. Open PaymentsSample.pdf, read Ms. Hildick’s comments, and use her random sample of 50 transactions as the basis for your analysis. Summarize your findings to determine whether Ms. Hildick’s conjectures about OurCampus! customer purchasing behaviors are correct. If you want the sampling error to be no more than $3 when estimating the mean purchase amount, is Ms. Hildick’s sample large enough to perform a valid analysis?
2. A manufacturing company produces electrical insulators. If the insulators break when in use, a short circuit is likely to occur. To test the strength of the insulators, destructive testing is carried out to determine how much force is required to break the insulators. Force is measured by observing the number of pounds of force applied to the insulator before it breaks.
Use the data stored in Force.xls (from 30 insulators) and subject it to this testing:
a. At the 0.05 level of significance, is there evidence that the population mean force required to break the insulator is greater than 1,500 pounds?
b. What assumption about the population distribution is needed in order to conduct the t test in (a)?
c. Construct a histogram, boxplot, or normal probability plot to evaluate the assumption made in (b).
d. Do you think that the assumption needed in order to con-duct the t test in (a) is valid? Explain.
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