Question

Wal-Mart wants to introduce a new subscription service (called Plum) that would result in customers getting free two day delivery. Wal-Mart introduces Wal-Mart Plum to a random sample of 99 customers. You are hired by Wal-Mart to analyze if the introduction of Plum and two day deliver increases sales for Wal-Mart. You find that the 99 random customers that were offered Plum Two Day Delivery spent $2,500 per year on Wal-Mart with a sample standard deviation of $500 in sales. (A) Test whether the sales of Wal-Mart Plum are statistically different from zero at an alpha of 5% (95% confidence level). Set up your null and alternative hypotheses. Test at the 95% level of significance. Show your test and critical statistics. Are the sales for Two Hour Plum Delivery statistically different from 0? Interpret your answer. (B) Suppose the typical Wal-Mart consumer spends $2000 a year. Test whether the introduction of Wal-Mart Plum Delivery increased sales. Set up your null and alternative hypotheses. Test at an alpha of 5% (95% confidence level). Show your test and critical statistics. Did Plum significantly increase sales? Interpret your answer.

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