The daily sales from a salon are normally distributed with a mean of $1,500 and a standard deviation of $250. The salon owner notices that sales were $750 on a particular day. Why should the owner be concerned about sales based on this scenario?
Sales of $750 are outside three standard deviations of the mean.
In a normal distribution, data points that lie beyond three standard deviations from the mean are considered highly unusual, indicating that they fall in the tails of the distribution. Given the salon's mean sales of $1,500 and standard deviation of $250, sales of $750 represent a significant drop, suggesting potential issues that the owner should investigate.
This statement is incorrect because sales of $750 are actually three standard deviations below the mean. To calculate the number of standard deviations, we find the difference between the mean and the sales figure: $1,500 - $750 = $750. Dividing this by the standard deviation ($250) gives us 3, not 2. Therefore, sales of $750 are far more significant than just two standard deviations from the mean.
This choice is incorrect as it suggests that $750 is within a normal range of sales. In reality, sales of $750 are below the mean by more than two standard deviations (specifically, they are three standard deviations below), indicating an abnormal sales day that warrants concern.
This statement is true, as $750 is indeed three standard deviations below the mean of $1,500. In a normal distribution, sales that fall outside this range are considered outliers, which could signal underlying problems in the salon's operations, customer flow, or external factors impacting business.
This choice is misleading because it implies that $750 falls within a range of normal variability. Since $750 is exactly three standard deviations below the mean, it is technically on the boundary but not within the range considered typical sales, making it cause for concern.
The sales figure of $750 is a critical outlier, being three standard deviations below the mean of $1,500. Such a significant deviation from expected sales levels indicates potential issues that the salon owner must address to understand the cause of the drop in sales. Recognizing and responding to these outlier days is essential for maintaining healthy business performance.
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