Question

In: Statistics and Probability

A pharmaceutical company operates retail pharmacies in 10 eastern states. Recently, the company's internal audit department...

A pharmaceutical company operates retail pharmacies in 10 eastern states. Recently, the company's internal audit department selected a random sample of n=

300300

prescriptions issued throughout the system. The objective of the sampling was to estimate the average dollar value of all prescriptions issued by the company. The data collected were

x overbarxequals=$14.5714.57

and

sequals=4.504.50.

Complete parts a and b below.

a. The 90% confidence interval estimate for the true average sales value for prescriptions issued by the company is from

$14.1414.14

$14.9914.99.

(Round to the nearest cent- 2 decimal places. Use ascending order.)

You are asked to interpret the meaning of this confidence interval by choosing the correct answer below:

The company believes with 90% confidence that the true mean prescription amount is between these two amounts.

Your answer is correct.

The company believes with 90% confidence that the sample mean prescription amount is between these two amounts.

There is a 0.90 probability that the true mean prescription amount is between these two values.

The company believes that the true mean prescription amount falls between these two values 90% of the time.

b. One of its retail outlets recently reported that it had monthly revenue of

$7 comma 5047,504

from

526526

prescriptions. Are such results to be expected? Should that retail outlet be audited?

(Round to the nearest cent as needed.)

When the population mean is at the upper limit of the 90% confidence interval computed in part a, the upper limit of the 90% confidence interval for the expected total monthly revenue for

526526

prescriptions would be

$7,889.307,889.30.

When the population mean is at the lower limit of the 90% confidence interval computed in part a, the lower limit of the 90% confidence interval for the expected total monthly revenue for

526526

prescriptions would be

$7,438.347,438.34.

Since this outlet reported sales of

$7 comma 5047,504

from

526526

prescriptions, there is

reason to believe that this is out of line. The retail outlet

should not

be audited.

Solutions

Expert Solution

A pharmaceutical company operates retail pharmacies in 10 eastern states. Recently, the company's internal audit department selected a random sample of n=300

prescriptions issued throughout the system. The objective of the sampling was to estimate the average dollar value of all prescriptions issued by the company. The data collected were

xbar=$14.57

and

s=4.50.

a. The 90% confidence interval estimate for the true average sales value for prescriptions issued by the company is from $14.14 to $14.99.

Answer:-

A. The company believes with 90% confidence that the true mean prescription amount is between these two amounts.

b. One of its retail outlets recently reported that it had a monthly revenue of $7,504 from 526 prescriptions.

Are such results to be expected? Should that retail outlet be audited?

The confidence interval is $14.14 to $14.99.

( $ 14.14 * 526 , $ 14.99 * 526 )

= ( $7437.64, $ 7884.74)

The confidence interval is ( $7437.64, $ 7884.74)

therefore $ 7504 is lies in the confidence interval .

So such result is expected.No need to audit the retail

Answer:- Since this outlet reported sales of $7504 from 526 prescriptions,

there is no reason to believe that this is out of line.

The retail outlet should not be audited.

orchestra answered 1 year ago

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A pharmaceutical company operates retail pharmacies in 10 eastern states.​ Recently, the​ company's internal audit department...

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A pharmaceutical company operates retail pharmacies in 10 eastern states. Recently, the company's internal audit department...