4 Mr. Rich Mann, is the credit manager of MCC Inc. Mr.Mann would like to estimate the cost of credit sales. From experience, credit customers have paid their bills in an average of 40 days and a standard deviation of 12 days. Customers who pay their bills in 10 days receive a 2% discount. Accounts that are not paid within 75 days are written off as bad debts. (Assume a normal distribution)

a)What percentage of accounts is within 25 and 60 days old?

B)What percentage of the accounts is written off as bad debts or receives the discount

5

1. Using the summary table below identify which variable (s) have positive or negative correlations with each other. Correlation Coefficients Variables Correlation Expense Ratio vs Return N = 105 42.46% Gas & Oil N = 25 94.81% Rent vs Size N = 26 85.01% 2. Test the hypothesis of zero correlation between a. Gas Price and Oil Price - State the Null and Alternate Hypothesis b. Rent and Size of Housing - State the Null and Alternate Hypothesis 3. For hypothesis test, at .01 Level of Significance a. How many degrees of Freedom? b. What is the Critical T = Statistic (T*)? c. Calculate the T Statistic and state the Decision Rule d. What is your Conclusion? t = rvn - 2 . X - H t V1 - 2 s/ vnAs Planning Manager, you are charged with investigating and estimating the cost of shipping goods based on distance. Specifically, what is the marginal cost of shipping a good in your company? What is the Fixed Cost? 1. Specify a Linear Model for estimating the Fare (Y) of shipping goods based on Distance (X) 2. You have the following summary data for Y and X. Using the summaries below (n = 20) a. What is the Fixed Charge for Shipment? b. What is the charge for each additional mile (Slope of the Line) c. Calculate the Standard Error of the Slope and hence d. Test the Hypothesis at .005 Level of significance that Distance does Not significantly affect Shipping charge. Be sure to state the null and alternate hypothesis. E(Y - 7) S= = [(Y - n) = 57614.54; [(X -X) = 611820.74 1 [( - X) X=1138.4; Y = 203.55; E(Y - Y)? = 3269.85: 6 = 2(Y -(x - >) E( x - X) b = E ( Y - n(x - x) -;a = Y -bx E(x - X)2