Business Statistics Center by Irwin/McGraw-Hill

Practical Data Analysis: Case Studies in Business Statistics

Sample Case

Case 8: American History Illustrated

Imagine you are the staff assistant to the publisher of American History Illustrated. Imagine further that you reported yesterday to your boss, the publisher, that the renewal rate for subscriptions increased from 0.512 in January to 0.641 in February. The renewal rate is computed as the number of subscriptions renewed in a given month divided by the total number of subscriptions that expired in that month. It gives the fraction renewed of subscriptions that could have been renewed. Imagine, finally, that your boss was pleased to hear this and wanted to know which kinds of subscriptions were contributing most to the increase. He asked you to prepare a further summary by breaking the subscriptions down into several categories: gift subscriptions, previously renewed subscriptions, direct mail subscriptions, subscriptions from a subscription agency, and those from a catalog agent. This follows a standard industry classification scheme. You have obtained the data, as follows.

For example, the total renewal rate for January was 23,545/45,955=.512, and the renewal rate for February for previously renewed subscriptions was 3907/5,140=0.760.

Provide the summary the boss requested, and interpret it for him.

SOLUTION

This case is based on real data, originally reported by C.H. Wagner in The American Statistician 36, no. 1, (February 1982), pp. 46-48. Reprinted with permission from The American Statistician. Copyright 1982 by the American Statistical Association. All rights reserved.

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