Question

Most people have returned clothing or other items to stores. Many clothes are returned to stores after the holidays (e.g., Christmas). Acme holding company is particularly interested in the clothes that have been returned after the holidays. They require their stores to keep records of the number of returned clothing items after the holidays. Acme’s corporate office is worried about a store it recently purchased called Stylish. Stylish seems to have a high proportion of returns for clothing items compared to a similar store, called Fashionista, in a similar neighborhood. After the last holiday season, the Stylish store had 130 returns of clothing items out of total sales of 950 clothing items. The other store, Fashionista, had 70 returns of clothing items out of total sales of 650 items. Assume that these are random samples that are representative of the population and the normal criteria are met.

Part A) Test the claim at the 5% significance level that the Stylish store has a higher proportion of returns for clothing items than the Fashionista store. Be sure you show work for each step.

Part B) Is there statistical evidence at the 1% significance level that the Stylish store has a higher proportion of returns for clothing items than the Fashionista store? Why or why not?

Answer 1