Required Tasks:
1. Compute the probability that the sampling plan will provide a result that suggests that SaveMor should reject the deal even if the true proportion of all customers who would switch is actually 0.70.
2. Compute the probability that the sampling plan will provide a result that suggests that SaveMor should accept the deal even if the true proportion of all customers who would switch is actually only 0.60.
3. Write a short report to Heidi outlining the sampling plan, the assumptions on which the evaluation of the sampling plan has been based, and the conclusions regarding the potential effectiveness of the sampling plan. The report should make a recommendation about whether Heidi should go through with the idea of using the sampling plan.
A common practice now is for large retail pharmacies to buy the customer base from smaller, independent pharmacies. The way this works is that the buyer requests to see the customer list along with the buying history. The buyer then makes an offer based on its projection of how many of the seller’s customers will move their business to the buyer’s pharmacy and on how many dollars of new business will come to the buyer as a result of the purchase. Once the deal is made, the buyer and seller usually send out a joint letter to the seller’s customers explaining the transaction and informing them that their prescription files have been transferred to the purchasing company.