ASSIGNMENT 02

COMPENSATION FOR SALES PROFESSIONALS

Question 01.
Salary $ is a variable that constantly changes based on experience and work position, so
the frequency distribution is built up for this variable. Mean value, standard deviation,
and variance were calculated using the Minitab statistical software as shown in Table 1.
The descriptive statistics and summary graph are presented as below.
Table 1. The descriptive statistics
Descriptive statistics
Salary $
Count 120
Mean 64925
Sample variance 117476832
Sample standard deviation 10839
Minimum 48621
Maximum 88730
Range 40109
Sum 7791057
1st quartile 56145
Median 61490
3rd quartile 76539
Mode 2
Kurtosis -1.11
Skewness 0.49
 18

16

14

12
Frequency

10

0
52500 60000 67500 75000 82500
Salary $

Figure 1. Data distribution chart

Table 2. Frequency Distribution – Position

Position Average of Salary Percentage
Inside 56020.52 43.1%
Outside 73830.43 56.9%
Total 129850.95 100%
 Salary $

43%
Inside
Outside
57%

Figure 2. Frequency Distribution – Position

Table 3. Frequency Distribution – experience
Experience Average of Salary Percentage
High 66338.675 34.1%
Low 59819.625 30.7%
Medium 68618.125 35.2%
Total 194776.425 100%

Salary $
35% 34%

High
Low
Medium

31%

Figure 3. Frequency Distribution – experience

Survey results based on the relationship between salary and position and the experience
of sales staff in San Francisco show that:
The average sale salary is $64925 (n = 120) with a standard deviation is $10839 with the
highest salary can be achieved is $ 88730 and the lowest salary is $48621. The analysis
also showed that over 57% of sale staff working outside have an average salary about
$73830.43 and 43% of sale staff working inside have an average salary about $ 56020.52.
In addition, about 34.1% of sales staff with a high experience (from 21 or more years)
have an average salary is $66,338,675; about 35.2% of sales staff have the medium
experience (from 11 - 20 years) with an average salary is $68618,125 and about 30.7% of
sale staff with low years of experience (1 - 10 years) receiving an average salary is
$59819,625.
Question 2.
Table 4. Descriptive statistics of sale staff
Descriptive statistics
Salary $
Count 120
Mean 64925
Sample variance 117476832
Sample standard deviation 10839
Minimum 48621
Maximum 88730
Range 40109
Sum 7791057
1st quartile 56145
Median 61490
3rd quartile 76539
Mode 2
Kurtosis -1.11
Skewness 0.49

The 95% confidence interval is given by:

S S
x́−t α
2
,n−1
.
√n ≤ X́ ≤ x́ +t α
2
, n−1
.
√n
 Available adata:
  x́ = Mean = 64925
 S = Sample standard deviation = 10839
 n = 120

 With Reliability = 95% → t α2 , n−1= 1.980099853 (student distribution table)

S S
 x́−t α ,n−1 .
√n
≤ X́ ≤ x́ +t α
, n−1
.
√n
2 2

10839 10839
↔ 64925 - 1.980099853* 120 ≤ X́ ≤ 64925 + 1.980099853* √120
√
↔ 62965.76 ≤ X́ ≤ 66884.23
Question 3.
Table 5. Descriptive statistics of sale staff work Inside
Descriptive statistics
Salary $
Count 60
Mean 56021
Sample variance 12886852
Sample standard deviation 3590
Minimum 48621
Maximum 64562
Range 15941
Sum 3361231
1st quartile 53110
Median 56210
3rd quartile 58446
Mode 2
Kurtosis -0.28
Skewness 0.31

The 95% confidence interval is given by:

S S
x́−t α
2
,n−1
.
√n ≤ X́ ≤ x́ +t α
2
, n−1
.
√n
 Available adata:
 x́ = Mean = 56021
  S = Sample standard deviation = 3590
 n = 60

 With Reliability = 95% → t α2 , n−1= 2.000995361 (student distribution table)

S S
 x́−t α ,n−1 .
√n
≤ X́ ≤ x́ +t α
, n−1
.
√n
2 2

3590 3590
↔ 56021 - 2.000995361 * 60 ≤ X́ ≤ 56021 + 2.000995361 * √ 60
√
↔ 55093.60 ≤ X́ ≤ 56948.295
Question 4.
Table 6. Descriptive statistics of sale staff work Outside
Descriptive statistics
Salary $
Count 60
Mean 73830
Sample variance 62773302
Sample standard deviation 7923
Minimum 60259
Maximum 88730
Range 28471
Sum 4429826
1st quartile 66549
Median 76316
3rd quartile 79045
Mode 0
Kurtosis -1.09
Skewness -0.24

The 95% confidence interval is given by:

S S
x́−t α
2
,n−1
.
√n ≤ X́ ≤ x́ +t α
2
, n−1
.
√n
 Available adata:
 x́ = Mean = 73830
 S = Sample standard deviation = 7923
  n = 60
tα
 With Reliability = 95% → 2
= 2.000995361 (student distribution table)
, n−1

S S
 x́−t α ,n−1 .
√n
≤ X́ ≤ x́ +t α
, n−1
.
√n
2 2

7923 7923
↔ 73830 - 2.000995361 * 60 ≤ X́ ≤ 73830 + 2.000995361 * √60
√
↔ 71783.27 ≤ X́ ≤ 75876.72

Question 5.
Use Minitab software to analysis of variance to test for any significant differences due to
position. With a .05 level of significance, and ignore the effect of years of experience.
Two hypotheses are proposed:
 H0: Have any significant differences due to position
 H1: Haven't any significant differences due to position
The result after running the Minitab software as below:

One-way ANOVA: Salary $ versus Position Inside Outside

Sample size 60 60
Mean 56021 73830
StDev 3590 7923
Lower Critical Value 54448 57593
Upper Critical Value 72258 75403
Significance level 0.5
S 6150.62
R-sq 68.07%
R-sq(adj) 67.80%
R-sq(pred) 66.98%
Pooled StDev 6150.62
F-Value 251.54
P-Value 0.000

One-way ANOVA: Salary $ versus Position

Method
Null hypothesis All means are equal
Alternative hypothesis At least one mean is different
Significance level α = 0.05
Equal variances were assumed for the analysis.
Factor Information
Factor Levels Values
Position 2 Inside, Outside
Analysis of Variance
Source DF Adj SS Adj MS F-Value P-Value
Position 1 9515793950 9515793950 251.54 0.000
Error 118 4463949042 37830077
Total 119 13979742992
Model Summary

S R-sq R-sq(adj) R-sq(pred)

6150.62 68.07% 67.80% 66.98%
Means
Position N Mean StDev 95% CI
Inside 60 56021 3590 (54448, 57593)
Outside 60 73830 7923 (72258, 75403)

Pooled StDev = 6150.62

Probability p-value = 0.000 <0.05 (α) so H0 is rejected and H1 is accepted. Concluded that
the salaries of 2 positions differ (P <0.05).
Question 6.
Use Minitab software to analysis of variance to test for any significant differences due to
years of experience. With a .05 level of significance, and ignore the effect of position.
Two hypotheses are proposed:
• H0: Have any significant differences due to years of experience
• H1: Haven't any significant differences due to years of experience
The result after running the Minitab software as below:
One-way ANOVA: Salary $ versus Experience

Low Medium High

Sample size 40 40 40
Mean 59820 68618 66339
StDev 6005 13621 9700
Lower Critical Value 56607 65406 63127
 Upper Critical Value 63032 71830 69551
Significance level 0.5
S 10258.1
R-sq 11.93%
R-sq(adj) 10.43%
R-sq(pred) 7.36%
Pooled StDev 10258.1
F-Value 7.93
P-Value 0.001

One-way ANOVA: Salary $ versus Experience

Method
Null hypothesis All means are equal
Alternative hypothesis At least one mean is different
Significance level α = 0.05
Equal variances were assumed for the analysis.
Factor Information
Factor Levels Values
Experience 3 High, Low, Medium
Analysis of Variance
Source DF Adj SS Adj MS F-Value P-Value
Experience 2 1668100099 834050050 7.93 0.001
Error 117 12311642893 105227717
Total 119 13979742992
Model Summary
S R-sq R-sq(adj) R-sq(pred)
10258.1 11.93% 10.43% 7.36%
Means
Experience N Mean StDev 95% CI
High 40 66339 9700 (63127, 69551)
Low 40 59820 6005 (56607, 63032)
Medium 40 68618 13621 (65406, 71830)
Pooled StDev = 10258.1
Probability p-value = 0,001 <0.05 (α) so H0 is rejected and H1 is accepted. Concluded that
the salaries of 3 years of experience have difference (P <0.05).
Question 7.
Use Minitab software to analysis of variance to test for any significant differences due to
position, years of experience, and interaction.. With a .05 level of significance. Two
hypotheses are proposed:
• H0: Have any significant differences due to position, years of experience, and
interaction.
• H1: Haven't any ny significant differences due to position, years of experience, and
interaction.
The result after running the Minitab software as below:

Coefficient
Term SE Coef T-Value P-Value VIF
s
Constant 64925 325 199.85 0.004  
Position
Inside -8905 325 -27.41 0.000 1.05
Outside -8905 325 -27.41 0.000 1.05
Experience
High 1413 459 3.08 0.003 1.38
Low -5106 459 -11.11 0.000 1.38
Position*Experience
Inside High -11 459 -0.02 0.980 1.38
Inside Low 4117 459 8.96 0.000 1.38
S 3558.76  
Position*Experienc
R-sq 89.67% Position Experience
  e
R-sq(adj) 89.22% F-Value 751.36 65.86 53.38
R-sq(pred) 88.56% P-Value 0.000 0.000 0.000

Two-way ANOVA: Salary $ versus Position, Experience, Experience*Position

Factor Information
Factor Type Levels Values
Position Fixed 2 Inside, Outside
Experience Fixed 3 High, Low, Medium
Analysis of Variance
Source DF Adj SS Adj MS
F-Value P-Value
Position 1 9515793950 9515793950 751.36
0.000
Experience 2 1668100099 834050050 65.86
0.000
Position*Experience 2 1352066184 676033092 53.38
0.000
Error 114 1443782758 12664761
Total 119 13979742992
Model Summary
S R-sq R-sq(adj) R-sq(pred)
3558.76 89.67% 89.22% 88.56%
Coefficients
Term Coef SE Coef T-Value P-Value VIF
Constant 64925 325 199.85 0.000
Position
Inside -8905 325 -27.41 0.000 1.00
Outside -8905 325 -27.41 0.000 1.00
Experience
High 1413 459 3.08 0.003 1.33
Low -5106 459 -11.11 0.000 1.33
Position*Experience
Inside High -11 459 -0.02 0.980 1.33
Inside Low 4117 459 8.96 0.000 1.33
Regression Equation
Salary $ = 64925 - 8905 Position_Inside
+ 8905 Position_Outside + 1413 Experience_High
- 5106 Experience_Low + 3693 Experience_Medium
- 11 Position*Experience_Inside
High + 4117 Position*Experience_Inside Low
- 4105 Position*Experience_Inside
Medium + 11 Position*Experience_Outside High
- 4117 Position*Experience_Outside
Low + 4105 Position*Experience_Outside Medium
Fits and Diagnostics for Unusual Observations
Obs Salary $ Fit Resid Std Resid
28 64562 57422 7140 2.06 R
31 88730 81629 7101 2.05 R
35 63799 55031 8768 2.53 R
51 63362 55608 7754 2.24 R
76 66320 75255 -8935 -2.58 R
85 62675 55608 7067 2.04 R
107 67603 75255 -7652 -2.21 R
R Large residual
Probability p-value = 0.000 <0.05 (α) so H0 is rejected and H1 is accepted. Concluded that
the salaries of position, years of experience, and interaction. have difference (P<0.05).