You Want to Estimate the Average Gasoline Price in Your $\$ 2.01 < \mu < \$ 2.13$

question 2

Multiple Choice

You want to estimate the average gasoline price in your city for a gallon of regular gasoline. You take a simple random sample of prices from 17 gasoline stations, recording an average cost of $2.07 and a standard deviation of $0.06. Assume that the population of these prices is normally distributed. Construct the 95% confidence interval estimate of the population mean. Round your estimates to the nearest cent.

• A) \(\$ 2.01 < \mu < \$ 2.13\)
• B) \(\$ 2.06 < \mu < \$ 2.08\)
• C) \(\$ 2.04 < \mu < \$ 2.10\)
• D) \(\$ 2.04 < \mu < \$ 2.08\)

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Definitions:

Understocking

Understocking is the situation where businesses have insufficient inventory to meet demand, leading to potential sales losses and customer dissatisfaction.

Cycle Service Level

The probability of not running out of stock in any one replenishment cycle within a supply chain.

Replenishment Lead Time

The time interval between placing an order and receiving the goods, crucial for inventory management.

Holding Cost

The total expense associated with storing unsold goods or inventory over a period, including warehousing, insurance, depreciation, and opportunity costs.