Question

5. Lisa’s Brewery brews nothing but the finest beer. She has four famous drafts: an Icy IPA, a Saucy Stout, a Poppin’ Pale Ale, and a Lively Lager. People love Lisa’s beer. The chart below shows the average amount of people who order the four famous drafts daily and the variance in those averages:

Draft type	Average orders per day	Variance
Icy IPA	159	62
Saucy Stout	128	70
Poppin Pale Ale	237	83
Lively Lager	99	10

Lisa has been considering dropping one of her drafts to focus on the other three. She has decided that, based on your calculation given the numbers above, she wants to drop the riskiest beer. Which draft do you suggest she drops? Show all work. (5 points)

Answer 1

Solution

Since largest possible sales (Xbar + 3σ) for Lively Lager is less than the least possible sales for any other beer (Xbar - 3σ), Lively Lager is the riskiest beer. Hence, suggestion is to drop Lively Lager. Answer

Details of calculations

Draft type	Average orders per day Xbar	Variance σ2	σ	Xbar - 3σ	Xbar + 3σ
Icy IPA	159	62	7.8740	151.1260	166.8740
Saucy Stout	128	70	8.3666	119.6334	136.3666
Poppin Pale Ale	237	83	9.1104	227.8896	246.1104
Lively Lager	99	10	3.1623	95.8377	102.1623

DONE