Answer to Question #44235 in Statistics and Probability for Dion Lewis

Question

3.22 In order to control costs, a company wishes to study the amount of money its sales force spends entertaining clients. The following is a random sample of six entertainment expenses (dinner costs for four people) from expense reports submitted by members of the sales force.

$157 $132 $109 $145 $125 $139

a Calculate _ , s2 and s for the expense data. In addition, show that the two different formulas for calculating s2 give the same result.

b. Assuming that the distribution of entertainment expenses is approximately normally distributed, calculate estimates of tolerance intervals containing 68.26 percent, 95.44 percent, and 99.73 percent of all entertainment expenses by the sales force.

c. If a member of the sales force submits an entertainment expense (dinner cost for four) of $190, should this expense be considered unusually high (and possibly worthy of investigation by the company)? Explain your answer.

d. Compute and interpret the z-score for each of the six entertainment expenses.