A retailer entered into an exclusive agreement with a supplier who guaranteed to

Question

A retailer entered into an exclusive agreement with a supplier who guaranteed to provide all products at competitive prices. The retailer eventually began to purchase supplies from other vendors who offered better prices. The original supplier filed a legal action claiming violation of the agreement. In defense, the retailer had an audit performed on a random sample of invoices. For each audited invoice, all purchases made from other suppliers were examined and the prices were compared with those offered by the original supplier. For each invoice, the percent of purchases for which the alternate supplier offered a lower price than the original supplier was recorded. Here are the data. Report the average of the percents with a 90% confidence interval. (Round your answers to one decimal place.) Lower limit % Upper limit % Do the sample invoices suggest that the original supplier's prices are not competitive on the average?

Explanation / Answer

mean = 50.24 , std. deviation = 27.71 , n =25

z value at 90% confidence interval = 1.645

CI = mean + / - z * ( s /sqrt(n))

= 50.24 + / - 1.645 * ( 27.71 / sqrt(25))

= (39.38 , 61.10)

Lower limit = 39.38

Upper limit = 61.10

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