Case Study: SaveMor Pharmacies

Question 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.

Probability that the savMor should reject the probability:

Question 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.

Probability that the savMor should reject the probability:

Question 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.

Analysis: According to the probabilities, it is identified that the SavMor should reject the deal even is the true proportion of all customers switching would be 0.70 that is 0.583. Moreover, it is also identified that it should accept the deal even with the true proportion of all customers switching is 0.60 that is 0.125. Overall results suggest that Heidi should not follow the sampling plan.