QUESTION 1

To: Director of ABC Company

From: Sales Manager
Date: 07 February 2014
Subject: The impact of television and newspaper advertising on sales
This report was prepared in accoradnce with the directions of the the
companys director and aims to ana
Regression analysis
Overall the company has increased its sales volume from 200.090.000 in
the first semester of 2012 to 233.300.000 in the second semester of
2012, an increase of 16.6%. However there are some areas of concern
since certain shops have not moved in line with the overall performance of
the company and sales have decreased during the second semester of the
year. The graphs that follow present the results of the company during the
first and second semester while the third graph combines the results for
the whole year.
The graph above suggests that shop no. 3 had the highest turnover
(24.200) during the first semester of 2012 while shop no. 14 had the
least turnover (2.000). Shops no 7, 9, 11 and 23 together with shop 3 are
the five leading ones in terms of turnover and account for 41% of the
companys total turnover. On the other hand shops no. 17, 1 and 21
together with shop no. 14 are the four with the lowest turnover and only
account for 6% of the companys total turnover.
During the second semester of 2012 shop no. 3 remained the one with the
highest turnover (28.500) while shops no. 7, 9, 11 and 23 are among the
first five shops with the highest turnover which still account for 41% of the
companys total turover. Shop no 14 was again the one with the least
turover and together with shops no. 22, 17 and 19 are those with the
lowest sales value and only account for 10% of the companys overall
sales.
The graph above compares the sales per semester per shop. A worrying
sign is that the sales of shops no. 4, 8, 15, 16 and 20 have declined during
the second semester of the year although there was increased spending
by the company on advertising.
The highest increase has been achieved by shop no. 14 at a percentage of
59,10% while shop no. 17 showed an increase of 57,70%.
On the other hand shop no. 8 recorded the highest decrease at a rate of
30,45%.

Statistical analysis

Mean
The mean is a term used in statistics to indicate an average figure for the
sample selected.
In the companys case the average sale figure for the first semester of
2012 stood at 8.700 while the value for the second semester of 2012
stood at 10.143. This suggests that the average income per shop
increased by 16.5%. However ,as already discussed above the
perfromance of some shops have adversely deteriorated during the
second part of 2012 and the average figures when used in isolation cannot
identify this pattern.
Mode
The mode is another statistical term that points out the most frequently
occuring value in a sample.
The most frequently occuring value during the first part of 2012 was
4.000 while for the second semester of the year the value most
frequenlty occuring was 8.000. It is clear from the calculation above that
there was an increase in the frequency of the sales value. However the
frequency histograms below show clearly the pattern of the two semesters

The frequency histograms are ways of calculating the frequency of the

results occuring within a sample size. The company sales will be viewed in
terms of bands in an attempt to identify where the sales volumes are
ranging during the two semesters. Five bands were created as shown
above as follows: 0 - 3.000, 3.000 - 6.000, 6.000 - 9.000, 9.000 12.000, 12.000 infininty.

The graphs above indicate that the majority of the shop sales range
between 3.000 to 6.000 during the first semester of 2012 while for the
second semester the majority of the sales fall under the 6.000 to 9.000
band. Evidently there was an increase in the sales volume during the
second semester of 2012 with sales ranging from 6.000 to 9.000 in
comparison to 3.000 to 6.000 in the first semester of the year.

Median
The median is a term used to highlight the midpoint of the sorted data
when sorted in an ascending order.
The midpoint for both semesters stands at 8.000 that suggests that when
the reults are sorted in an ascending order, the value of the 12 th shop in
ranking stands at 8.000. Obviously the companys sales during the two
semesters have remained relatively stable and any increase in the sales
volume is not excessive that would result in the midpoint ranking higher
during the second part of the year.
Standard deviation and coefficient of variation
The standard deviation is a way to calculate the typical dispersion of the
sample from the average. The number for the first semester stands at
5.089 while for the second semester at 5.597. It is clear that the
dispersion of the shop sales during the second part of the year is higher
rather than the first part of the year.
However the standard deviation must always be understood in relation to
the average of the sample. On the other hand, the coefficient of variation
is an independent measurement unit. It is considered best practice to
compare data sets using the coefficient of variation instead of the
standard deviation.
The coefficient of variation measures the variation in percentage terms
and makes it easier to compare the two sets. The coefficient of variation
for the first semester stood at 58.5% while for the second semester the
coefficient was lower at 55.2%. This suggests that the first semester
results are more consistent and there is greater variability in the results of
the second semester.
Skewness
Skewness is a measure of the extent to which a probability distribution of
a sample size leans either to the left or the right of the mean. If the mean,
median and mode are the same then the skewness is zero and there is a
symmetrical pattern. If however the skewness of the sample is positive
then the results lean towards the right tail of the distribution. On the other

hand if skewness is negative then the results lean towards the left tail of
the distribution.
When looking at the results of the company, it is clear that the distribution
is right skewed for both semesters since the mean is higher that the mode
and median. The skewness for semester one was 1,35 while for the second
semester skewness took a value of 2.
Empirical Rule
The empirical rule holds that for a normal distribution, it is expected that
the interval k to contain a known percentage of data. For k = 1,
68.26% will lie within + 1, k = 2, 95.44% will lie within + 2, k = 3,
99.73% will lie within + 3
Basically all values that are outside these limits are considered outliers.
For both semesters, the highest value of shop 3 lies outside these limits
and is considered rare. Overall the results are normal and lie within the
prescribed limits of the empirical rule. Their dispersion in relation to the
average follows a stable pattern and there is little concern over their
spread.
Advertising campaign
As already discussed above, the advertising campaign had a positive
reflection on the results of the company with total sales increasing by
16.6%. However as evidenced by graph 1.3, some shops performance has
been adversely affected during the second part of the year and hence the
advertising campaign has not provided any benefits to these shops.
Summary
In light of the above, the companys overall performance has improved
during the second semester of 2012. The advertising campaign has helped
boost sales and the average income per shop. The results of the company
follow a normal pattern and evidence suggests that the companys
turnover will continue to grow in the future. There are however some areas
of concern that needs to be monitored, especially in relation to the
decrease of the individual turnover of shops no. 4, 8, 15, 16 and 20
despite the advertising campaign commissioned by the company.
Management will need to look into the factors that led to the decreased
turnover and take corrective action in an attempt to prevent it from
occuring.
QUESTION 2

As we can see

which is higher than the upper level 1,96. Thus it

falls in the rejection area and we reject

There is sufficient evidence that

the average age of foreigners that visited a hotel in Pafos during the
winter months over the last few years is 60 years old.

The chart below describes shows that the test statistic is in the rejection
region.

0,025

0,025

-1,96

1,96
3

QUESTION 3
a) The probability of the two bedroom flats having a selling price of
less than 188.000 is 97.725% calculated as follows:
P(X<188000) = P(

<

) = P(Z<2) = 0,97725

b) The probability of the two bedroom flats having a selling price

greater than 191.000 is 0.298% calculated as follows:
P(X>191000) = P(

>

) = P(Z

= 1-P (Z<2,75) =

1-0,99702 = 0,00298
c) The probability that the two bedroom flats have a selling price
between 183.440 and 188.560 is 17.871% calculated as follows:

P(183440 < X < 188560) = P(

<

)=

P(0,86 < Z < 2,14) = P(Z<2,14) - P(Z < 0,86) = 0,98382 - 0,80511
= 0,17871
d) The probability of the two bedroom flats having a selling price of
less than 174.240 is 7.493% calculated as follows:
P(X < 174240) = P(

<

) = P(Z < -1,44) = 0,07493

e) The value K is 181.720 and it is calculated as follows

P(X>k)=33,36%
P(

>

P(

)=1- P(

) = 0,3336

) = 1-0,3336 = 0,6664 = P (Z < 0,43)

= 0,43
k-180.000 = 1.720
k = 181.720