Thread: Confidence Interval Question

Revenues reported last week from nine shops franchised by an international Clothier averaged $59,540 with a standard deviation of $6,860. Based on these figures, in what range might the company expect to find the average revenue of all shops. Include all assumptions.

I'm confused what assumptions I'm supposed to make. Does the number of shop have something to do with it?

Originally Posted by Janu42

Revenues reported last week from nine shops franchised by an international Clothier averaged $59,540 with a standard deviation of $6,860. Based on these figures, in what range might the company expect to find the average revenue of all shops. Include all assumptions.

I'm confused what assumptions I'm supposed to make. Does the number of shop have something to do with it?

You want to be +/- a certain number of standard deviations away from the mean... See here:

http://www.ascd.org/ASCD/images/publ...01a_fig1.1.gif

If you are +/- 2 standard deviations away, you will be accounting for 95% of the shops. So here you are assuming the desired mean will fall inside the 95% interval.

So I assume that I use a 95% interval. I know how to figure it out but I just wasn't sure that I was supposed to assume 95%