7.121 Competitive prices?
A retailer entered into an exclusive agreement with a supplier who guaranteed to provide all products at competitive prices. The retailer eventually began to purchase supplies from other vendors who offered better prices. The original supplier filed a legal action claiming violation of the agreement. In defense, the retailer had an audit performed on a random sample of invoices. For each audited invoice, all purchases made from other suppliers were examined, and the prices were compared with those offered by the original supplier. For each invoice, the percent of purchases for which the alternate supplier offered a lower price than the original supplier was recorded. Here are the data:43
cmppric
| 100 | 0 | 0 | 100 | 33 | 45 | 100 | 34 | 78 |
| 100 | 77 | 33 | 100 | 69 | 100 | 89 | 100 | 100 |
| 100 | 100 | 100 | 100 | 100 | 100 | 100 |
Report the average of the percents with a 95% margin of error. Do the sample invoices suggest that the original supplier’s prices are not competitive on the average?
7.121
(64.55, 92.09). The average percent of purchases for which the alternate supplier offered a lower price is 64.55% and 92.09%. So, a large percent of the time, the alternate vendor gave better prices, meaning the original supplier’s prices are not competitive.