Chapter 12, Problem 31E

(a)

To determine

To propose a sampling strategy for the supervisor.

Explanation of Solution

It is given in the question that between quarterly audits, a company likes to check on its accounting procedures to address any problems before they become serious. The accounting staff processes payments on about $120$ orders each day. Thus, a sampling strategy for the supervisor will be that we will assign numbers $\text{001 to 120}$ to each order. Use random numbers to select ten transactions to examine. Thus, this will be the strategy for the supervisor.

(b)

To determine

To explain how would you modify that strategy if the company makes both whole sales and retail sales requiring different bookkeeping procedures.

Explanation of Solution

It is given in the question that between quarterly audits, a company likes to check on its accounting procedures to address any problems before they become serious. The accounting staff processes payments on about $120$ orders each day. Thus, we will modify that strategy if the company makes both whole sales and retail sales requiring different bookkeeping procedures by using stratified random sampling method to conduct the process by dividing into strata.