Reference no: EM132979099

The manager doesn't believe she has the resources to do as many cross-checks to ensure a margin of error of 0.5%. She has noticed that in the items checked, some items are ringing up for less at the cash register, so technically, a customer could end up with a bill that is less than what they were expecting. She wonders if she would be able to defend her store against fines based on the average amount customers are being wrongly charged (either over- or undercharged).

(Hint: for the purpose of this question, consider that items that ring up at correct prices essentially have the incorrect charge equal to zero. This is valuable data, and such items should be included in your calculation of the mean dollar amount of incorrect charges in Part (b)).

Problem 1: Based on the collected sample data, what is the maximum overcharge for an item in this study? And, what is the maximum undercharge for an item in this study?

Problem 2: Based on the collected sample data, what is the 95% confidence interval for mean dollar amount of incorrect charges?

Problem 3: If the inspector's sample results in an error rate of 2.7% of items being overcharged, do you think showing the average error (accounting for both undercharges and overcharges) will help her avoid getting fined?

Problem 4: Should the store manager do a larger study to be sure she can pass inspection? The fine for not passing an inspection is about $1,000, followed by a repeated inspection (as the recent news article tells us, "Walmart on New Hope Church Road in Raleigh, for example, failed three consecutive inspections, ringing up almost $5,000 in fines before finally passing." See Inspector: One in 10 NC stores ring up wrong prices). Please explain your answer.