One of the items that businesses would like to be able to testis whether or not a change they make to their procedures iseffective. Remember that when you create a hypothesis and then testit, you have to take into consideration that some variance betweenwhat you expect and what you collect as actual data is because ofrandom chance. However, if the difference between what you expectand what you collect is large enough, you can more readily say thatthe variance is at least in part because of some other thing thatyou have done, such as a change in procedure.
For this submission, you will watch a video about the Chi-squaretest. This test looks for variations between expected and actualdata and applies a relatively simple mathematical calculation todetermine whether you are looking at random chance or if thevariance can be attributed to a variable that you are testingfor.
Imagine that a company wants to test whether it is a better ideato assign each sales representative to a defined territory or allowhim or her to work without a defined territory. The company expectstheir sales reps to sell the same number of widgets each month, nomatter where they work. The company creates a null and alternatehypothesis to test sales from defined territory sales versus opensales.
One of the best ways to test a hypothesis is through aChi-square test of a null hypothesis. A null hypothesis looks forthere to be no relationship between two items. Therefore, thecompany creates the following null hypothesis to test: There is norelationship between the amount of sales that a representativemakes and the type of territory (defined or open) that arepresentative works in. The alternate hypothesis would be thefollowing: There is a relationship between the kind of salesterritory a sale representative has (defined or open) and theamount of sales he or she makes during a month.
Step 1:
Watch this video.
Step 2:
Use the following data to conduct a Chi-square test for eachregion of the company in the same manner you viewed in thevideo:
| Region | Expected | Actual |
|---|
| Southeast | | |
Defined | 100 | 98 |
Open | 100 | 104 |
| Northeast | | |
Defined | 150 | 188 |
Open | 150 | 214 |
| Midwest | | |
Defined | 125 | 120 |
Open | 125 | 108 |
| Pacific | | |
Defined | 200 | 205 |
Open | 200 | 278 |
Step 3:
Write an 800–1,000-word essay, utilizing APA formatting, todiscuss the following:
- Describe why hypothesis testing is important tobusinesses.
- Report your findings from each Chi-square test that youconducted.
