Question

A pharmaceutical company operates retail pharmacies in 10 eastern states. Recently, the company's internal audit department selected a random sample of 300 prescriptions issued throughout the system. The objective of the sampling was to estimate the average dollar value of all prescriptions issued by the company. The data collected were x-$14.05 and s 4.00. Complete parts a and b below. a. Determine the 90% confidence inter al estimate or the true average sales value for presc tions issued by the company Interpret the interval estimate. The 90% confidence interval is $ Round to the nearest cent as needed. Use ascending order.) Interpret the interval. Choose the correct answer below. A. O B. ° C. ( D. The company believes with 90% confidence that the sample mean prescription amount is between these two amounts. The company believes that the true mean prescription amount falls between these two values 90% of the time. There is a 0.90 probability that the true mean prescription amount is between these two values. The company believes with 90% confidence that the true mean prescription amount is between these two amounts. b. One of its retail outiets recently reported that it had monthly revenue of $7,284 from 526 prescriptions. Are such results to be expected? Should that retail outlet be audited? Assuming the population mean is at the up er imit o e 9 % confidence interval compute part a, te u per limit of the 9 % confidence interval r the expected total month re enue or 26 prescriptions ould be A ming he population mean is at the lower mit o the 90% confidence interval computed in part a, the lower m o the 0% cont de ce interval or the expected total monthly revenue or 526 preso ons would be $ G en at this outlet reported sales of S 7,284 from 526 prescriptions, there is | ▼ reason to believe that this is out of line. The retail outlet (Round to the nearest cent as needed.) ▼| be audited.

Answer 1

The 90% confidence interval for the average sales value of prescriptions indicates the range where the true population mean is likely to fall. Retail outlet's reported revenue is assessed by comparing it to a calculated range based on the confidence interval to determine if an audit is needed.

Step-by-step explanation:

A 90% confidence interval estimate for the true average sales value of prescriptions is a range of values derived from sample data, which we expect to contain the true population mean 90% of the time if we were to take many samples. The interpretation of this interval is: "We estimate with 90% confidence that the true population mean of prescription sales is between the lower and upper bounds of this interval."

When evaluating whether the retail outlet's reported revenue of $7,284 from 526 prescriptions is reasonable, we would calculate the expected total revenue using the upper and lower limits of the 90% confidence interval and compare them to the reported revenue. If the reported revenue falls outside this range, it may be an indicator that an audit is warranted.