Criticizing the managers credit plan

Assignment Help Basic Statistics

Reference no: EM1394909

The J.C. Nickel department store is considering adopting a new credit management policy in an attempt to reduce the number of credit customers defaulting on their payments. The credit manager has suggested that, in the future, credit should be discontinued to any customer who has twice been a week or more late with his monthly installment payment. He supports his claim by noting that past credit records show that 90% of all those defaulting on their payments were late with at least 2 monthly payments. Suppose from our own investigation we have found that 2% of all credit customers actually default on their payments, and that 45% of those who have not defaulted have had at least 2 late monthly payments. Find the probability that a customer with 2 or more late payments will actually default on his payments and, in light of this probability, criticize the manager's credit plan.

Reference no: EM1394909

Questions Cloud

Compute the ph of the solution : If the actual yield is 220.0 g and the theoretical yield is 275.6 g then what will be the percent yield of ferrous sulfide.

Explain the function of biological molecule : Diagram and explain the function(s) of the following biological molecules that comprise the plasma (cell) membrane: phospholipid bilayer, membrane proteins, carbohydrates.

Determine the pressure in standard atmospheres : Determine the pressure in Standard atmospheres,Torr and mm Hg units when A gauge on compressed gas cylinder reads 1500 psi ( pounds per square inch; 1 atm =14.7 psi).

What time will it take chlorine gas to effuse : What time will it take 10.0 mL of Chlorine gas to effuse through a porous barrier when it has been noticed that 76.3 min are needed for 10.0 mL of Hydrochloric acid gas to effuse through the same barrier.

Criticizing the managers credit plan : Find the probability that a customer with 2 or more late payments will actually default on his payments and, in light of this probability, criticize the manager's credit plan.

Quasi-experimental experiment design : A psychology professor is interested in whether implementing weekly quizzes improves student learning. She decides to use the weekly quizzes in one section of her introductory psychology class and not to use them in another section of the same cou..

Difference between a root and a rhizoid : What is the difference between a root and a rhizoid? What are the "two hallmarks" (p. 574) of alternation of generations? What two stages alternate, and when do mitosis and meiosis happen?

Probability mass function and distribution function : Determine and plot the probability mass function and probability distribution function of the contract award amount (in millions of dollars).

Determine the molar mass of the acid : Using a Sample of 0.3991 grams of an unknown monoprotic acid, HA, which combines with Sodium hydroxide according to the balanced equation HA + NaOH ® NaA + H2O when 35.30 mL of 0.1086 M Sodium hydroxide is required to titrate the acid to the equiv..

User Account

All Pages