In the given scenario, the average or mean retail price of MP3 players is $165 i

Question

In the given scenario, the average or mean retail price of MP3 players is $165 in the South Atlantic region and $170 in the Mid-Atlantic region. While, the standard deviation in South Atlantic region is $30, that means the prices of MP3 players in South Atlantic region fluctuates between $135 to $195 and the standard deviation in Mid-Atlantic region is $15, that means the prices of MP3 players in Mid-Atlantic region fluctuates between $155 to $195. This information suggests that the variability in average retail prices of the MP3 players is higher in the South Atlantic region in comparison to the Mid-Atlantic region.

From the company’s point of view, the earnings or revenues from the Mid-Atlantic region are stable and have less fluctuation in comparison to the earnings or revenues from the South Atlantic region owing to the higher variability in average prices. Also, the Mid-Atlantic region is more profitable for the business as the mean retail price of MP3 players in the region is higher.

Explanation / Answer

A manufacturer of MP3 players surveyed one hundred retail stores in each of the firm’s sales regions. An analyst noticed that in the South Atlantic region the average retail price was $165 (mean) and the standard deviation was $30. However, in the Mid-Atlantic region the mean price was $170, with a standard deviation of $15. What do these statistics tell us about these two sales regions?

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