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a) Comment on any problems you see with the use of the mean and standard deviation as summary statistics. b) How well do you think the Normal model will work on these data? Explain.

a) Comment on any problems you see with the use of the mean and standard deviation as summary statistics. b) How well do you think the Normal model will work on these data? Explain.

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section10.5: Comparing Sets Of Data
Problem 26PFA
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R1.9. Fraud detection A credit card bank is investigating the in- cidence of fraudulent card use. The bank suspects that the type of product bought may provide clues to the fraud. To examine this situation, the bank looks at the North American Industry Classification System (NAICS) of the business related to the transaction. This is a code that is used by the U.S. Census Bureau and Statistics Canada to identify the type of every registered business in North America. For example, 1141 designates Fishing, 3121 is Beverage Manu- facturing, and 6113 is Colleges, Universities, and Profes- sional schools. Longer codes designate subcategories A company intern produces the following histogram of the NAICS 4-digit-level codes for 1536 transactions: # of Transactions 500 400 300 200 100 4800 5300 5800 6300 6800 7300 7800 SIC He also reports that the mean NAICS is 5823.13 with a standard deviation of 488.17. a) Comment on any problems you see with the use of the mean and standard deviation as summary statistics. b) How well do you think the Normal model will work on these data? Explain.
Transcribed Image Text:R1.9. Fraud detection A credit card bank is investigating the in- cidence of fraudulent card use. The bank suspects that the type of product bought may provide clues to the fraud. To examine this situation, the bank looks at the North American Industry Classification System (NAICS) of the business related to the transaction. This is a code that is used by the U.S. Census Bureau and Statistics Canada to identify the type of every registered business in North America. For example, 1141 designates Fishing, 3121 is Beverage Manu- facturing, and 6113 is Colleges, Universities, and Profes- sional schools. Longer codes designate subcategories A company intern produces the following histogram of the NAICS 4-digit-level codes for 1536 transactions: # of Transactions 500 400 300 200 100 4800 5300 5800 6300 6800 7300 7800 SIC He also reports that the mean NAICS is 5823.13 with a standard deviation of 488.17. a) Comment on any problems you see with the use of the mean and standard deviation as summary statistics. b) How well do you think the Normal model will work on these data? Explain.
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