TITAN INSURANCE

The Titan Insurance Company has just installed a new incentive payment scheme for its lift policy sales force. It wants to have an early view of the success or failure of the new scheme. Indications are that the sales force is selling more policies but sales always vary in an unpredictable pattern from month to month and it is not clear that the scheme has made a significant difference.

The scheme has now been in operation for four months. It has settled down after fluctuations in the first two months due to the changeover. To test the effectiveness of the scheme, Titan has taken a random sample of 30 salespeople, measured their output in the penultimate month before the changeover, and then measured it in the fourth month after the changeover (they have deliberately chosen months not too close to the changeover).

I as a data analyst in the company (hypothetical), is assigned this work. Primarily, I answered the following questions:

• Conduct a hypothesis test to determine whether the new scheme has significantly raised outputs. Use level of significance as 5%

• What conclusion does the test lead to?

• What observations do you have about this result?