Question

You work in the corporate office for Allsup’s franchise that operates 316 stores in Texas and New Mexico. The per-store daily customer count (i.e., the mean number of customers in a store in one day) has been steady, at 900, for some time. To increase the customer count, the chain is considering cutting prices for coffee beverages. The small size will now be $0.57 instead of $0.99, and the medium size will be $0.67 instead of $1.19. Even with this reduction in price, the chain will have a 42% gross margin on coffee. To test the new initiative, the chain has reduced coffee prices in a sample of 34 stores, where customer counts have been running almost exactly at the national average of 900. After four weeks, the stores sampled stabilize at a mean customer count of 967 and a standard deviation of 196. Using a 0.05 alpha level determine if there statistical evidence that reducing coffee prices is a good strategy for increasing the mean customer count.

H0: μ ≤ 900

H1: μ > 900

Include, at a minimum, following data for your hypothesis test.

X bar, S, n, df, level of significance (alpha), Critical t value, tSTAT , and the units of the Standard Deviation.

Answer 1