Nt1330 Unit 2 Case Analysis Essay

CASE II

1. Is it proper to multiply the average order size, $42.33, by the number of addresses (1,300,000) in the target mailing?

Even though the case prompt mentions that the sample is random, it is random only for the subset of 600,000 addresses of well-off people who purchase luxury items by mail. That subset of 600,000 might not represent the total 1,300,000 address that the Catalog company is trying to reach out to, specially since the 600,000 address were chosen particularly due to their affinity towards purchasing items online. For a more realistic estimate of yearly sales, the average should be multiplied solely by the number of address where the sample was taken from (600k).

2. Is it better, as suggested, to multiply the endpoints of the confidence interval by the target mailing size?

Yes, it would be better.

They want to answer the question of how much money there is to be made based off a sample size. In order to do that they should scale up this prediction to a real life scale in order to achieve their goal.

3. Would it be better to multiply by the size of the frame used to select the random sample?

If I understand this question right, it is asking about whether we should multiply by the avg. by the number of addresses in the subset where the random samples were taken from (600k, not the 1.3M). If we are considering the 1.3M, then the sample would not be random, it would be systematically chosen and that defies the purpose of using statistical analysis. By not choosing numbers randomly, we introduce error to the analysis.

4. Should anything else trouble you about this situation?

Not a random sample. They sampled “well-off people”. That subset of people may be the most likely to purchase, but they aren’t the only ones who can/would purchase their

product.

Sample is only of 13 people who would actually “buy” the products. The other people who would not buy or respond didn’t provide an accurate depiction of how much they would pay for something. Therefore there method of surveying maybe be flawed from the start.

5. What is your best estimate, with confidence limits, for potential catalog sales?

Find the confidence interval for the proportion of people that would purchase the products (13/55) and multiply that by 600,000 (not 1,300,000 - because the 600,000 addresses do not have the same needs as the 1.3M so the proportion of buyers might be even smaller and will introduce more error to the analysis).