To overcome the current crisis in the airline industry, Die Hard Airline (DHA) i

Question

To overcome the current crisis in the airline industry, Die Hard Airline (DHA) is interested in offering one of two discount programs. The operations research team at DHA has developed a simulation model to evaluate the potential profits of the two programs. They have also developed 10 different scenarios for represnting uncertain future economic conditions. They believe that the possibilty of every scenario is equally likely and the populations of the profits are normally distributed. The estimated expected profits of the two discount programs under each scenario are given below.

1) Let ud be the mean difference in profits of Program A minus Program B. The operations research team wants to find out if Program B provides higher profits than Program A does. The alternative hypthoesis is :

a) ud<0

b) ud=0

c) ud does not equal 0

d) ud> 0

2) We conclude at alpha=5% that

a) Program B provides higher profits than Program A since the p-value is greater than the significance level

b) Program B does not provides higher profits than Program A since the P-value is less than the significance level.

c) There is no significane difference in profits between the two programs since the P-value is greater than the significance level

d) Program B provides higher profits than Program A since the P-value is less than the significance level

e) There is no significance difference in profits between the two programs since the P-value is less than the significance level

f) Progran B does not provide higher profits than Program A since the P-Value is greater than the significance level

3) The margin of error associated with a 95% confidence interval for ud is (give answer to 3 decimal places)

Explanation / Answer

1)
alternate hypothesis
a) ud < 0

2)

             N    Mean StDev SE Mean
C3          10   11.23   5.34     1.69
C4          10   11.69   5.33     1.68
Difference 10 -0.460 0.660    0.209

95% upper bound for mean difference: -0.077
T-Test of mean difference = 0 (vs < 0): T-Value = -2.20 P-Value = 0.028

p-value = 0.028 < 0.05

we reject null hypothesis
d) Program B provides higher profits than Program A since the P-value is less than the significance level
is correct

3)
margin of error = t * sd(difference) /sqrt(n)

here sd = .0.660, n = 10
margin of error = 0.472

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