Question

A grocery store’s receipts show that Sunday customer purchases have a skewed distribution with a mean of 27$ and a standard deviation of 18$. Suppose the store had 310 customers this Sunday. A) estimate the probability that the store’s revenues were at least 9,000$ B) if. On a typical Sunday, the store serves 310 customers, how much does he store take in on the worst 1% of such days ?

Answer 1

Answer:

(a) The probability that the store’s revenues were at least $9,000 is 0.0233.

(b) The revenue of the store on the worst 1% of such days is $7,631.57.

Step-by-step explanation:

According to the Central Limit Theorem if we have a population with mean μ and standard deviation σ and we take appropriately huge random samples (n ≥ 30) from the population with replacement, then the distribution of the sum of values of X, i.e ∑X, will be approximately normally distributed.  

Then, the mean of the distribution of the sum of values of X is given by,  

 $\mu_{X}=n\mu$

And the standard deviation of the distribution of the sum of values of X is given by,  

$\sigma_{X}=\sqrt{n}\sigma$

It is provided that:

$\mu=\ 27\\\sigma=\ 18\\n=310$

As the sample size is quite large, i.e. n = 310 > 30, the central limit theorem can be applied to approximate the sampling distribution of the store’s revenues for Sundays by a normal distribution.

(a)

Compute the probability that the store’s revenues were at least $9,000 as follows:

$P(S\geq 9000)=P(\frac{S-\mu_{X}}{\sigma_{X}}\geq \frac{9000-(27\times310)}{\sqrt{310}\times 18})\\\\=P(Z\geq 1.99)\\\\=1-P(Z$

Thus, the probability that the store’s revenues were at least $9,000 is 0.0233.

(b)

Let s denote the revenue of the store on the worst 1% of such days.

Then, P (S < s) = 0.01.

The corresponding z-value is, -2.33.

Compute the value of s as follows:

$z=\frac{s-\mu_{X}}{\sigma_{X}}\\\\-2.33=\frac{s-8370}{316.923}\\\\s=8370-(2.33\times 316.923)\\\\s=7631.56941\\\\s\approx \ 7,631.57$

Thus, the revenue of the store on the worst 1% of such days is $7,631.57.