Question

2. A study by a wholesaler regarding the payment of invoices reveals the time from billing until payment is received is approximately normally distributed. The mean time until payment is received is 18 days and the standard deviation is 5 days.

a) What percentage of the invoices is paid within 14 days? (1 mark)

b) What percentage of invoices is paid in more than 14 days but less than 25 days? (1 mark)

c) The management wants to encourage customers to pay their monthly invoices as soon as possible. Therefore, it announced that a 2% reduction in price would be in effect for customers who pay within 7 days of the billing date. A study conducted a few months after the announcement showed that the percentage of customers who paid within 7 days was 4.8%. What was the change in the percentage of customers who paid within 7 days?

Answer 1

Hence 21.19 percent of the invoices is paid within 14 days.

So, 70.74 percent of the invoices is paid in more than 14 days but less than 25 days.

So, before 1.39% of customers were paying within 7 days before.

Now it's 4.8% so total change = 4.8 - 1.39 = 3.41%

Please comment if any doubt. Thank you.