To retain your McChick franchise, your fast food drive through should average at

Question

To retain your McChick franchise, your fast food drive through should average at least $300,000 per month. Given the receipts for the prior 12 months listed below:

1. Construct a 95% confidence interval estimate for the mean monthly receipts.

2. Does your franchise have a problem? Why or why not?

3. A new Chicken Little franchise is due to open down the street next month. Should you be concerned?      

Receipts $ 320,000 Month hAkarch February S 285,000 January 255,000 December 322,000 Npvember S326,000 October September $ 329,000 August uly June May April $ 341,000 $ 352,000 $ 366,000 $ 355,000 S 322,000 $ 289,000

Explanation / Answer

following sample information has been generated using ms-excel

(a)

(1-alpha)*100% confidence interval for population mean=sample mean±t(alpha/2,n-1)*sd/sqrt(n)

95% confidence interval for population mean=

=mean±t(0.05/2, n-1)*sd/sqrt(n)=321833.3±2.2*32053.5/sqrt(12)=321833.3±20365.5=(301468,342199)

(b)300000 lies in the 95% confidence inverval, so we can expect there would be 300000 income

(c) yes, I should be in concerned as the confidence interval depends on sample size and sample mean. as new store will change the sample income and sample size

n= 12 sample mean= 321,833.3 sd=sample standard deviation= 32,053.5

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