# Question: A large discount chain compares the performance of its credit

A large discount chain compares the performance of its credit managers in Ohio and Illinois by comparing the mean dollar amounts owed by customers with delinquent charge accounts in these two states. Here a small mean dollar amount owed is desirable because it indicates that bad credit risks are not being extended large amounts of credit. Two independent, random samples of delinquent accounts are selected from the populations of delinquent accounts in Ohio and Illinois, respectively. The first sample, which consists of 10 randomly selected delinquent accounts in Ohio, gives a mean dollar amount of $ 524 with a standard deviation of $ 68. The second sample, which consists of 20 randomly selected delinquent accounts in Illinois, gives a mean dollar amount of $ 473 with a standard deviation of $ 22.

a. Set up the null and alternative hypotheses needed to test whether there is a difference between the population mean dollar amounts owed by customers with delinquent charge accounts in Ohio and Illinois.

b. Figure 10.6 gives the MINITAB output of using the unequal variances procedure to test the equality of mean dollar amounts owed by customers with delinquent charge accounts in Ohio and Illinois. Assuming that the normality assumption holds, test the hypotheses you set up in part a by setting a equal to .10, .05, .01, and .001. How much evidence is there that the mean dollar amounts owed in Ohio and Illinois differ?

c. Assuming that the normality assumption holds, calculate a 95 percent confidence interval for the difference between the mean dollar amounts owed in Ohio and Illinois. Based on this interval, do you think that these mean dollar amounts differ in a practically important way?

a. Set up the null and alternative hypotheses needed to test whether there is a difference between the population mean dollar amounts owed by customers with delinquent charge accounts in Ohio and Illinois.

b. Figure 10.6 gives the MINITAB output of using the unequal variances procedure to test the equality of mean dollar amounts owed by customers with delinquent charge accounts in Ohio and Illinois. Assuming that the normality assumption holds, test the hypotheses you set up in part a by setting a equal to .10, .05, .01, and .001. How much evidence is there that the mean dollar amounts owed in Ohio and Illinois differ?

c. Assuming that the normality assumption holds, calculate a 95 percent confidence interval for the difference between the mean dollar amounts owed in Ohio and Illinois. Based on this interval, do you think that these mean dollar amounts differ in a practically important way?

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