Exhibit 12

question 37

Essay

Exhibit 12.5
The following questions use the information below.
The owner of Sal's Italian Restaurant wants to study the growth of his business using simulation.He is interested in simulating the number of customers and the amount ordered by customers each month.He currently serves 1000 customers per month and feels this can vary uniformly between a decrease of as much as 5% and an increase of up to 9%.The bill for each customer is a normally distributed random variable with a mean of $20 and a standard deviation of $5.The average order has been increasing steadily over the years and the owner expects the mean order will increase by 2% per month.You have created the following spreadsheet to simulate the problem.
-Sal,from Exhibit 12.5,has produced the following spreadsheet to compute confidence intervals on his income.What formula should go in cell B8 to compute the upper limit on a 95% confidence interval for the true population mean?
$\begin{array}{|c|c|c|}\hline & \text { A } & \mathrm{B} \\\hline 1 & & \\\hline 2 & \text { Sample Size: } & 300 \\\hline 3 & & \\\hline 4 & \text { Sample Mean } & \begin{array}{l}309,773.5 \\6\end{array} \\\hline 5 & \text { Sample StandardDeviation } & \begin{array}{l}33,831.4 \\4\end{array} \\\hline 6 & & \\\hline 7 & \text { 95\% LCL for the population mean: } & \begin{array}{l}305,945.1 \\7\end{array} \\\hline 8 & \text { 95\% UCL for the population mean: } & \begin{array}{l}313,601.9 \\5 \\\end{array} \\\hline 9 & & \\\hline 10 & \text { Target Proportion } & 0.900 \\\hline 11 & \text { 95\% Lower Confidence Limit: } & 0.866 \\\hline 12 & \text { 95\% Upper Confidence Limit: } & 0.934 \\\hline\end{array}$

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Definitions:

Allowance Method

An accounting technique used to account for bad debts, where an estimated amount is deducted from accounts receivable to reflect possible non-collection.

Bad Debts

are amounts owed to a company that are considered uncollectible, leading to a financial loss.

Percentage of Sales

A financial analysis tool used to forecast future expenses, based on a fixed percentage of the total sales.

Allowance for Doubtful Accounts

A contra asset account on a company's balance sheet that estimates the amount of receivables that may not be collected.