# Savemor Pharmacies

## Savemor Pharmacies

Memorandum To: Tina Turner From: Anon Date: January 12, 2009 Re: SaveMor Pharmacies The binomial distribution describes the possible number of times that a particular event will occur in a sequence of observations. So in this case, we want to either accept or reject the customer base. So we are looking at how many customers will make the switch and based on the statistics we will determine if we should make the deal. Conditions for a Binomial Distribution are: n identical trials all trials are independent each trial has only one outcome, success or failure success is constant from trial to trial count the number of success in the set of trials There are two samples shown below using binomial distribution to see if we should go ahead with the purchase. {draw:frame} {draw:frame} {draw:frame}
The sample size (n=200) is the number of Hubbard customers. The number of successes is 129.5, which gives a sample proportion of 64.75%. To calculate the z-value, use the equation from above, which would mean to take the number of successes, subtract the mean, and then divide by the standard deviation. This gives a z-value of -1.62, which means there is only a 5.26% chance that the sampling plan would provide results that suggest Savemor should reject the sampling plan, even if the true proportion of all customers who would switch is actually 70%. This tells us that there is only a 4.46% chance that less than 129.5 customers will switch over. According to the research analyst, Quincy Kregthorpe, if 130 or more of the 200 customers indicate that they would make the switch. This probability gives good evidence that Savemor should in fact accept the deal. {draw:frame} {draw:frame} {draw:frame}
The sample size (n=200) is the number of Hubbard customers. The number of successes is 129.5, which gives a sample proportion of 64.75%. To calculate the z-value, use the equation from above, which would mean to take the number of successes,...