Cindy Ho, VP of Finance at Discrete Components, Inc. (DCI), theorizes that the d
ID: 3181331 • Letter: C
Question
Cindy Ho, VP of Finance at Discrete Components, Inc. (DCI), theorizes that the discount level offered to credit customers affects the average collection period on credit sales. Accordingly, she has designed an experiment to test her theory using four sales discount rates (0%, 2%, 4%, and 6%) by randomly assigning five customers to each sales discount rate. An analysis of Cindy's data produced the following ANOVA table.
Source of Variation
SS
df
MS
Treatment
5.35
3
1.783333
0.161
Error
177.2
16
11.075
Total
182.55
19
Based on these results, using a 5% significance level , we can claim
A.There is sufficient evidence to conclude that the average collection period on credit sales is not the same for the different discount levels.
B. There is sufficient evidence to conclude that credit sales increase depending on the discount levels offered.
C. There is insufficient evidence to conclude that the average collection period on credit sales is not the same for the different discount levels.
D. There is insufficient evidence to conclude that credit sales increase depending on the discount levels offered.
Source of Variation
SS
df
MS
FTreatment
5.35
3
1.783333
0.161
Error
177.2
16
11.075
Total
182.55
19
Explanation / Answer
Since F value is small its corresponding p - value would be large. Hence,
There is insufficient evidence to conclude that credit sales increase depending on the discount levels offered.
Option D is correct.
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