Data Management, Analysis and Reporting

Complete Chapter 4 problems 67 and 78 from page 204 and 206 at the end of the chapter. Refer to the associated files: P04_67.xlsxfor problem 67 and P04_78.xlsxfor problem 78.

. Each year the employees at Zipco receive a $0, $2000,

or $4500 salary increase. They also receive a merit

rating of 0, 1, 2, or 3, with 3 indicating outstanding

performance and 0 indicating poor performance. The

joint probability distribution of salary increase and

merit rating is listed in the file P04_67.xlsx. For

example, 20% of all employees receive a $2000

increase and have a merit rating of 1. Find the correlation

between salary increase and merit rating. Then

interpret this correlation.

78. A manufacturing plant produces two distinct products,

A and B. The cost of producing one unit of A is $18

and that of B is $22. Assume that this plant incurs a

weekly setup cost of $24,000 regardless of the number

of units of A or B produced. The means and standard

deviations of the weekly production levels of A and B

are given in the P04_78.xlsx.

a. Assuming that the weekly production levels of A

and B are independent, find the mean and standard

deviation of this plant’s total weekly production

cost. Between which two total cost figures can you

be about 68% sure that this plant’s actual total

weekly production cost will fall?

b. How do your answers in part a change if you

discover that the correlation between the weekly

production levels of A and B is actually 0.29?

Explain the differences in the two sets of results.

 
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