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A BUSINESSMAN IS CONSIDERING THE ESTABLISHMENT OF A SUNDAY MORNING

A BUSINESSMAN IS CONSIDERING THE ESTABLISHMENT OF A SUNDAY MORNING

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Author: Christine Farr
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http://theperfecthomework.com/a-businessman-is-considering-the-establishment-of-a-sunday-morning-bagel-delivery-service-in-a-local-suburb/

A businessman is considering the establishment of a Sunday morning bagel delivery service in a local suburb. Based on a cost analysis, he has arrived at the following conclusion: if the average order, mu, is more than 14 bagels per household, the operation will be profitable, and if evidence of this can be demonstrated (in advance), he will institute the service. If such evidence is not forthcoming, he will not institute the service. Based on past experience with bagel delivery services, the standard deviation in order size is known to be 3 bagels. A random sample of 36 households in the suburb in question will be surveyed in detail about how many bagels they will order. The businessman is willing to have a .01 risk that the service will be instituted when the average order is at most 14 bagels per household. a) What is the probability of instituting the bagel service when the true average order size is 15 bagels per household?b) What is the probability of instituting the bagel service when the true average order size is 17 bagels per household?


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