Question

In statistics, a hypothesis is a claim or statement about a property of a population. A hypothesis test is a procedure for testing a claim about a property of a population.

 

In your initial post explain the importance of the Hypothesis test in a business setting, and give an example of a situation where it is helpful in business decision making.

Answer 1

Business managers make decisions on a daily basis that affect the efficiency and success of their companies. To monitor progress and stay competitive, most organizations collect and store large amounts of data. While the data collected can be used to make important business decisions, data storage itself does not equate to improved decision making. Rather, it is critical that you correctly analyze and interpret the data before applying it to improve business performance.

One important way of analyzing a set of data is through hypothesis testing. Hypothesis testing uses sample statistics to test a claim about a data parameter. For example, your company wants to increase sales by funding a new marketing campaign. It uses the campaign in one region of the country to test the effects and begins collecting data to see whether the campaign has had its desired effect. Your company will only continue the new campaign nationally if it believes sales will rise by more than 25%.