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A retail outlet for Boxo-witz Calculators sells 720 calculators per year. It costs $2 to store one calculator for a year. To reorder, there is a fixed cost of $5, plus $2.50 for each calculator. How many times per year should the store order calculators, and in

2 Answers

5 votes

Final answer:

The question involves performing a hypothesis test for a population standard deviation of calculator prices, using the Chi-Square distribution. One must calculate the Chi-Square test statistic and compare it to a critical value from a Chi-Square distribution table to determine if the claim that the standard deviation is greater than $15 is supported.

Step-by-step explanation:

The subject in question is a hypothesis test about a population standard deviation in the field of statistics, which is a branch of mathematics. The scenario described involves testing the claim about the standard deviation of calculator prices across various stores. Since this involves a sample standard deviation and the test of a population parameter, we will use the Chi-Square (χ²) distribution for this hypothesis test.

Steps for the Hypothesis Test

  1. State the null hypothesis H0: σ² = 225 (where σ is the population standard deviation and the value 225 comes from 15², the claim squared).
  2. State the alternative hypothesis Ha: σ² > 225.
  3. Calculate the test statistic using the formula χ² = (n-1)s² / σ₀², where n is the sample size, s is the sample standard deviation, and σ₀ is the claimed standard deviation under the null hypothesis.
  4. Find the critical value from the χ² distribution table using the degrees of freedom (n-1) and the level of significance (usually α=0.05).
  5. Compare the test statistic to the critical value. If the test statistic is greater than the critical value, reject the null hypothesis.

For this test, using the formula for the test statistic:
χ² = (43-1)×12² / 15²
= 42×144 / 225
= 42×0.64
= 26.88

To determine if this test statistic is significant, compare it with the critical value for χ² with 42 degrees of freedom at the chosen significance level. If 26.88 exceeds the critical value, we reject the null hypothesis and conclude that there is sufficient evidence to support the claim that the standard deviation is greater than $15.

User Elma
by
4.3k points
10 votes

Answer:

The store should order 60 calculators, 12 times per year to minimize inventory cost.

Step-by-step explanation:

Given that;

Annual demand = 720 calculators

Holding cost (Storage cost) (H) = $2 per calculator

Ordering cost (D) = $5

Economic order quantity (EOQ)

= √ 2 × A × D / H

= √ (2 × 720 × $5) / $2

= √ $7,200 / $2

= √ 3,600

= 60 calculators

Number of orders per year

= Annual demand ÷ EOQ

= 720 ÷ 60

= 12 times

Therefore, the store should order 60 calculators 12 times per year to minimize inventory cost.

User Grumdrig
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5.3k points