When implementing a packaged Enterprise Resource Planning[ERP] system, many comp

Question

When implementing a packaged Enterprise Resource Planning[ERP] system, many companies report that the module they first install is Financial Accounting. Among the measures used to gauge the effectiveness of their ERP system implementation is acceleration of the financial close process. Below is a sample of companies that report their average time (in weeks) to financial close before and after the implementation of their ERP system. What type of calculation is this? State the hypotheses. Compute the mean difference. Compute the standard deviation of the differences. Compute the standard deviation of the mean difference. Compute the t-statistic. How many degrees of freedom does the t-statistic have? Is the alternative one-or two-sided? Explain. What is the P-value associated with the t-statistic? (Assume that the other assumption and conditions for inference are met.) At alpha =.05, what do you conclude?

Explanation / Answer

a)

This is a paired t test.

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b)

Let ud = u(after) - u(before)
.              
Formulating the null and alternative hypotheses,              
              
Ho:   ud   >=   0  
Ha:   ud   <   0   [ANSWER]

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c)

Calculating the mean of the differences,
              
XD =    -0.9625       [ANSWER]

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d)

Calculating the standard deviation of the differences (third column):              
              
s =    0.980221064          
              
Thus, the standard error of the difference is sD = s/sqrt(n):              
              
sD =    0.346560481          

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f)

As df = n - 1 =    7   [ANSWER]

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g)      

As we can see, this is a    left   tailed test, as Ha used <, at least in our convention here.

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h)                      
              
              
As t = [XD - uD]/sD, where uD = the hypothesized difference =    0   , then      
              
t =    -2.77729301          
              
              
              
Thus, using p values, as this is left tailed,              
              
p =        0.013702409   [ANSWER]

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i)  
              
As P < 0.05, WE REJECT THE NULL HYPOTHESIS.      

There is significant evidence that the average time to financial close is less after the implementation of their ERP system. [CONCLUSION]  
              
              
              

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