Hypothesis Testing Using One Sample

For this practical application assignment, you will assume the role of two different managers to recommend a course of action by applying hypothesis testing to business decisions. For the first scenario, you work for a regionally based magazine publisher, and for the second, you have just been hired away from your buyer’s position at Macy’s to work for the local mall.

You will need to use the Hypothesis Tester – Single Sample document, provided in Resources, to complete both of the scenarios.

Practical Application Scenario 1

In 2010, Playbill Magazine contacted Boos Allen to determine the mean annual household income of its readers. Using a list of customers provided by Playbill, Boos Allen randomly sampled 300 Playbill customers. From that sample, Boos Allen is confident that the population average Playbill reader’s household income is $119,155, and has a population sample household income standard deviation of $30,000.

Recently two Playbill executives suggested that Playbill‘s reader mean average household income has increased and that the magazine’s price should be raised. As Playbill‘s new marketing manager, you convince Playbill‘s chief operating officer to complete a second survey with Boos Allen to confirm that assertion. Yesterday the new Boos Allen report appeared on your desk. From another sample of Playbill customers taken from a recent list you e-mailed Boos Allen, the 2012 Playbill customer’s profile is a mean annual household income of $124,450 with a population standard deviation of household income unchanged at $30,000.

You realize that even though you do not have the Playbill reader population standard deviation, you do have enough data to perform a “One Sample Hypothesis Test.” In order to choose the correct statistical tool to complete this assignment, consider the following questions:

• What do you know about the population being studied (for example, do you know the standard deviation of that entire population)?
• What do you know about the sample of the population you took (for example, which sample statistical parameters do you have—mean, standard deviation, variance, and so on)?

Complete the following for this assignment:

1. Determine the null hypothesis (via both an explanation and a math equation).
2. Determine the alternative hypothesis (via both an explanation and a math equation).
3. Determine whether to accept or reject the null hypothesis. You may solve the equation manually or use the Hypothesis Tester – Single Sample file, provided in Resources. You may also use the Hypothesis Tester media piece provided in Resources to review the process for this equation.
4. Determine if the p-value indicates acceptance or rejection of the null. Use alpha = .05

Report the rejection or acceptance of the null in terms of the scenario results. For this scenario, write a three-sentence paragraph that details: 1. why you can be statistically confident that the mean household Playbill reader’s income has increased, decreased, or remains the same, and 2. what would happen if alpha was .01.

Practical Application Scenario 2

In this practical application scenario, you have just been hired away from the Macy’s linen department buyer position by the Mall of Elbonia (MoE), as the new food court manager. Why? Rumor had it you just earned your MBA! One week ago the MoE conducted convenience interviews in the mall’s food court. One hundred interviews were gathered. The results are summarized in the document titled MoE Interviews, provided in the Updates and Handouts section.

In examining the interview results, you find that each customer is listed in a row and each column contains data on:

• The customer’s gender (if you need this data, use the coding convention: 0 for female, 1 for male).
• How much time the customer spent in the mall.
• How much money he or she spent on food.
• The customer’s rating of the mall’s friendliness and attractiveness.

1. After applying the descriptive data measures, the mean is particularly telling; you believe that you can happily tell the food court owners that the average amount mall customers spend on food during a visit has increased. A 2011 study found that customers spent an average of $18.75 per visit. You realize this is a One Sample Test of Hypothesis situation. Use the data in the interview results file (MoE Interviews in Updates and Handouts) and the process outlined below to be sure that your suspicions are correct and that the average amount mall customers spend on food during a visit to your mall has increased. Use an alpha of .05.
2. Determine the null hypothesis (via both an explanation and a math equation).
3. Determine the alternative hypothesis (via both an explanation and a math equation).
4. Determine whether to accept or reject the null hypothesis. You may solve the equation manually or use the Hypothesis Tester – Single Sample document provided in the Resources.
5. Determine if the p-value indicates acceptance or rejection of the null. Use alpha = .05.
6. Report the rejection or acceptance of the null in terms of the scenario results. For this scenario, write a three-sentence paragraph that details: 1. why you can be statistically confident that the average amount a food court customer spends has increased, decreased, or remains the same, and 2. what would happen if alpha was .01 or .10.

Assignment Submission

Complete both of your scenario answers in one Word file (please submit a .docx file) and copy the Excel output, (or any other computer application output that you decided to use), including any graphics, tables, and so on, into that Word document.

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