A large retail company has 500 stores in the United Sates and 300 stores in Euro

Question

A large retail company has 500 stores in the United Sates and 300 stores in Europe. The average number of employees per store is 200, for a total of 100,000 employees in the United States and 60,000 employees in Europe. The company is considering offering employees one of two new benefits --one additional day of paid vacation per year or a small increase in pay. A survey will be given to a sample of employees to investigate which benefit is preferred and whether there is a difference in preference between employees in the United States and employees in Europe. Two sampling methods have been proposed. The Company will randomly select 8 stores from its 800 stores. All employees at the 8 selected stores will be asked which bandit they prefer. The company will randomly select 1,000 employees from a list of all employees at the United States stores and 600 employees form a list of all employees at the European stores. All 1, 600 selected employees will be asked which benefit they prefer. A) One of the two methods results in a stratified sample of employees and the other results in a cluster sample of employees. i) Identify the sampling method that results in a stratified sample employees and identify the strata. ii) Identify the sampling method that results in a cluster sample of employees, and identify the clusters. B) Give one statistical advantage and one statistical disadvantage of using sampling method 1.

Explanation / Answer

Answer to part a)

i)

The sampling method II results in a stratified sample of employees:

The strata are bsed on "united States & europe"

.

ii)

The sampling method I is cluster sampling.

And the cluster is "8 stores out of 800 stores" irrespective of the fact to which country do they belong to.

.

Answer to part b)

Sampling Method I:

Advantage: It saves time, since you do not have to form two groups based on the region. You directly select 8 out of the 800 stores available.

Disadvantage: It may fail to represent the population correctly, since there are more stores in US than in europe. And in case if out of the 8 stores in the sample 6 are of europe, we would end up getting a biased data.

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