Phase One 1) Project Proposal We will be comparing the differences in the prices of pain medication sold at Walgreens Pharmacy

and CVS/ Caremark Pharmacy. The sample of 12 medications with 100 count bottles being compared between the two pharmacies.

The price of 12 pain medications was collected from two pharmacies: Walgreens and CVS/Caremark.

Name of Pain Medication Aleve Generic naproxen Excedrin: Headache relief Generic acetaminophen & caffeine Advil Generic ibuprofen Bayer Generic aspirin Bufferin Generic aspirin buffered with CaCO3 & Mg(OH)2 Tylenol Generic Acetaminophen
2) Frequency Tables Walgreens Pharmacy Classes 1.99-3.98 3.99-5.98 5.99-7.98 7.99-9.98 9.99-11.98 Frequency 1 0 4 5 2 12

Walgreens Pharmacy 9.99 7.99 9.99 7.99 9.49 6.99 6.99 1.99 8.49 6.99 8.99 6.79

CVS/ Caremark Pharmacy 10.49 7.99 9.39 7.29 9.49 6.99 6.49 1.99 9.49 7.39 8.79 6.79

Cumulative Frequency 1 1 5 10 12

Relative Frequency .0833 0 .3333 .4167 .1667 1

In order to construct the frequency table for Walgreens Pharmacy data, the prices for the 12 pain medications were arranged in numerical order. The steps are shown below. 1) Range= 9.99-1.99 = 8 2) We decided to use 5 classes, so class width = range/ # of classes = 8/5 = 1.6 thus the class width is rounded up to 2. 3) The smallest value 1.99 was taken to be the first lower class limit and then 2 was added to get the next lower class limit, 3.99. This process was continued until there were 5 lower class limits in total. 4) To find the upper class limit the second lower class limit, 3.99, was taken and .01 was subtracted off to give the first upper class limit of 3.98. Then the class width, 2, was added until there were 5 upper class limits in total. 5) The number of observations within each class was noted (the frequency) and then the cumulative and relative frequency were calculated. CVS/Caremark Pharmacy Classes 1.99-3.98 3.99-5.98 5.99-7.98 7.99-9.98 9.99-11.98 Frequency 1 0 5 5 1 12 Cumulative Frequency 1 1 6 11 12 Relative Frequency .0833 0 .4167 .4167 .0833

Once again, the data for CVS/Caremark pharmacy was organized in numerical order so a frequency table could be constructed. The steps are shown below. 1) Range= 10.49-1.99 = 8.5 2) 5 classes were used once again, so class width = range/ # of classes = 8.5/5 = 1.7 thus the class width was rounded up to 2.

3) The smallest value 1.99 was taken to be the first lower class limit and then 2 was added to get the next lower class limit, 3.99. This process was continued until there were 5 lower class limits in total. 4) To find the upper class limit the second lower class limit, 3.99, was taken and .01 was subtracted off to give the first upper class limit of 3.98. Then the class width, 2, was added until there were 5 upper class limits in total. 5) The number of observations within each class was noted (the frequency) and then the cumulative and relative frequency were calculated.

3) Histograms

Walgreens
5

Frequency

To construct the histogram for the Walgreens data, the lower and upper class limits were used as the horizontal scale values and the frequency of observations for each class was the vertical scale. In order to construct this histogram, the lower and upper class limits were inserted as cutpoints and 5 bars were created because there are 5 classes.

CVS/Caremark
5

Frequency

To construct the histogram for the CVS/Caremark pharmacy data, the lower and upper class limits were used as the horizontal scale values and the frequency of observations for each class was the vertical scale. In order to construct this histogram, the lower and upper class limits were inserted as cutpoints and 5 bars were created because there are 5 classes. 4) Stem-and-leaf Plots To construct the Stem-n-leaf plots for both pharmacies, the data was first sorted data numerically. The stems are the first digit of the 2-digit numbers . We listed the stems under the heading Stem and then take the last digit of each number and put them under the leaf heading. Then using mini tab we got the following stem n leaf plots.

Walgreens Pharmacy Stem-and-leaf of C1 N= 12 Leaf Unit = 0.10 N* = 2 LO 19 Stem Leaf 1.9 9 ... 6.7 9 6.9 999 7.9 99

8.4 8.9 9.4 9.9

9 9 4 99

For Example 1.9 9 would read as $1.99 LO = lowest observation and thus there is a gap after the first stem until 6.7. Since there is a gap after the first stem until 6.7, most of the data seems to be clustered on the right side leading us to believe that the shape of the data is skewed left. CVS Pharmacy Stem-and-leaf of C1 N = 12 Leaf Unit = 0.10 N* = 2 Stem Leaf 1.9 ... 6.4 6.7 6.9 7.2 6.3 6.9 8.7 9.3 9.4 9 9 9 9 9 99 9 9 9 99

LO = lowest observation and thus there is a gap after the first stem until 6.4. Since there is a gap after the first stem until 6.4, most of the data seems to be clustered on the right side leading us to believe that the shape of the data is skewed left.

5) Mean, Median, Mode, Variance, and Standard deviations

Mean Walgreens Pharmacy CVS Pharmacy 7.7233 7.715

Median 7.99 7.69

Mode 6.99 9.49

Variance 4.6442 4.9075

Standard deviation 2.1551 2.2153

1. The average or mean of prices for the Walgreens Pharmacy medication was 7.7233. This means on average the cost of the pain medications at this pharmacy were about $7.72. 2. The average or mean of prices for the CVS Pharmacy medication was 7.715. This means on average the cost of the pain medications at this pharmacy were about $7.72 3. The median price for Walgreens Pharmacy was 7.99. This means that 50% of the pain medications within the sample were greater than or equal to $7.99. 4.The median price for Walgreens Pharmacy was 7.69. This means that 50% of the pain medications within the sample were greater than or equal to $7.69. 5.The mode of the Walgreens sample was 6.99. This price occurred three times within the data with the medications Generic Ibuprofen, Bayer and Generic Aspirin Buffered CaCO3 & Mg(OH)2 6. The mode of the CVS sample was 9.49. This price occurred twice within the data with the medications Advil and Bufferin 7. The sample variance for Walgreens Pharmacy was 4.6442. To calculate this we used the Computing Formula. We then took the square root of the variance in order to get the standard deviation .When we calculated this we figured the standard deviation was 2.1551. 8. The sample variance for CVS Pharmacy was 4.9075. To calculate this we again used the Computing Formula. We then took the square root of the variance to calculate the standard deviation. When we did this we figured the standard deviation was 2.2153.

6) Data % in Intervals
The interval for Walgreens is 5.5682 to 9.8784 for -2, +2We predict that at least 75% of the data is in this interval using Chebyshev's Theorem. There are actually 9 observations in this interval, thus the percent is 75%.

he interval for CVS/Caremark is 5.4997 to 9.9303 for -2, +2We predict that at least 75% of the data is in this interval using Chebyshev's Theorem. There are actually 10 observations in this interval, thus the percent is 83%.

Phase Two
In this phase, a total of three confidence intervals are constructed. One confidence interval for Walgreens population mean, one for CVS/Caremark population mean, and one for the difference between the two population means. In this case, all the population means are prices of pain medication. The table below shows relevant statistics from phase one that we will be using to construct the confidence intervals. Walgreens Pharmacy X1-bar = 7.7233 S12 = 4.6442 S1 = 2.1551 n1 = 12 CVS/Caremark Pharmacy X2-bar = 7.7150 S22 = 4.9075 S2 = 2.2153 n2 = 12

1) Now we are constructing the 95% confidence interval for the true mean price of pain medications at Walgreens pharmacy. Since n1 < 30, our degree of freedom is 11 since 12-1=11. We also would use the following formula X-bar +- t/2 * (S/(sqrt of n)) Since we are using the 95% confidence interval, =0.05 thus 0.05/2 gives us t.025. Using the T-table, the intersection of row 11 ( our degree of freedom) and column t.025 we get 2.201 which we substitute in for our t/2 in the formula, X-bar +- t/2 * (S/(sqrt of n)). The following is our work in determining the 95% confidence interval. = 7.7233 +- 2.201 (2.1551/ (sqrt 12)) = 7.7233 +- 1.3693 This gives us the interval, (6.354, 9.0926).

Therefore, with 95% confidence, we can say that the true mean price of pain medication at Walgreens pharmacy is between $6.35 and $9.09. 2) Now we are constructing the 95% confidence interval for the true mean price of pain medications at CVS/Caremark pharmacy. Since n1 < 30, our degree of freedom is 11 since 12-1=11. We also would use the following formula X-bar +- t/2 * (S/(sqrt of n)) Since we are using the 95% confidence interval, =0.05 thus 0.05/2 gives us t.025. Using the T-table, the intersection of row 11 ( our degree of freedom) and column t.025 we get 2.201 which we substitute in for our t/2 in the formula, X-bar +- t/2 * (S/(sqrt of n)). The following is our work in determining the 95% confidence interval. = 7.715 +- 2.201(2.2153/(sqrt 12)) = 7.715 +- 1.4075 This gives us the interval, (6.3075, 9.1225). Therefore, with 95% confidence, we can say that the true mean price of pain medication at CVS/Caremark pharmacy is between $6.31 and $9.12. 3) Now we construct a 95% confidence interval for the difference between the two population means. The first population is Walgreens pharmacy containing the prices of pain medications and the second is CVS/Caremark pharmacy containing the prices of pain medication as well. Since n1 , n2 < 30, our degree of freedom is 22 since 12+12-2=22. We also would use the following formula. We are using this formula since our variances for Walgreen Pharmacy and CVS/Caremark pharmacy are approximately equal. Sp is the square root of Sp2 which is equal to . Since we are using the 95% confidence in interval, =0.05 thus 0.05/2 gives us t.025.

Using the T-table, the intersection of row 22 ( our degree of freedom) and column t.025 we get 2.074 which we substitute in for our t/2 in the formula . The following work shows how we determined Sp2. ((12-1)*4.6442+(12-1)*4.9075)/(12+12-2) = 4.77585 Then we took the square root to get Sp which is equal to 2.1854. Finally, the following is our work in determining the 95% confidence interval. = (7.7233-7.7150) +- 2.074*2.1854*sqrt((1/12)+(1/12)) = .0083 +- 1.8504 This gives us the interval, (-1.8421, 1.8587). Since zero lies within this interval, with 95% confidence we cannot draw any conclusions about the difference between the mean prices of pain medications at Walgreens and CVS/Caremark pharmacy.

Phase Three
In this phase, we will be testing the means for both Walgreens and CVS/Caremark pharmacy as well as testing for the difference between the two means. Here is the summarized data for both pharmacies that we will be using. Walgreens Pharmacy X1-bar = 7.7233 S12 = 4.6442 S1 = 2.1551 n1 = 12 CVS/Caremark Pharmacy X2-bar = 7.7150 S22 = 4.9075 S2 = 2.2153 n2 = 12

A) Pain medication can be costly and more so for people who do not have insurance. Generally, a buyer is doing well if they can find an effective pain medication for less than $8.00. Thus, we will be testing to see whether the mean price of pain medication at Walgreens Pharmacy is less than $8.00. We will be conducting the test at the 5% significance level so =0.05. Here, are the results using the six-step procedure of hypothesis testing 1) Ho: mu = $8.00 Ha: mu < $8.00 2) =0.05 and since this test is one-tailed left as well as n1<30, we are using the T-table so we have t.05. The degree of freedom is 11 since 12-1=11. The intersection of 11 and t.05 in the T-table gives t.05 = 1.796. 3) We will be using the following formula to determine the test statistic, T= 7.7233-8/ (2.1551/sqrt(12)) = -.2767/.6221 T= -0.4448 4) Ho will be rejected if T>t which is equal to 1.796 as shown in step 2. 5) However, T= -0.4448 which less than 1.796 thus we will reject the null hypothesis. 6) Therefore, there is not enough evidence to say that the average price of pain medication at Walgreens Pharmacy is less than $8.

Now, well be testing to see whether the mean price of pain medication at CVS/Caremark Pharmacy is less than $8.00. We will be conducting the test at the 5% significance level so =0.05. Here, are the results using the six-step procedure of hypothesis testing 1) Ho: mu = $8.00

Ha: mu < $8.00 2) =0.05 and since this test is one-tailed left as well as n2<30, we are using the T-table so we have t.05. The degree of freedom is 11 since 12-1=11. The intersection of 11 and t.05 in the T-table gives t.05 = 1.796. 3) We are going to be using the following formula to determine the test statistic,

T= 7.7150-8/ (2.2153/sqrt(12)) = -.285/.6395 T= -0.4457 4) Ho will be rejected if T>t which is equal to 1.796 as shown in step 2. 5) However, T= -0.4457 which less than 1.796 thus we will reject the null hypothesis. 6) Therefore, there is not enough evidence to say that the average price of pain medication at CVS/Caremark Pharmacy is less than $8.

B) Now, well be testing for the difference between the mean prices of pain medication at Walgreens and CVS/Caremark Pharmacy. We will be testing at the 5% significance level so =0.05 Here, are the results using the six-step procedure of hypothesis testing
1)

Ho: mu1=mu2 Ha: mu1 > mu2

2) =0.05, and since this test is one-tailed right as well as n1, n2 <30, we are using the T-table so we have t.05. The degree of freedom is 22 since

12+12-2=22. The intersection of 22 and t.05 in the T-table gives t.05 = 1.717. 3) We are going to use the following formula in order to determine the test statistic, where Sp is the square root of Sp2 which in turn is found using the following formula, . First, we will find what Sp is equal to. Here is the work Sp2= (12-1)4.6442+(12-1)4.9075/(12+12-2) = 105.0687/22 =4.77585 Sp = sqrt(4.77585) Sp = 2.1854 Now we plug in the value for Sp into the formula for the test statistic. T= (7.7233-7.7150)/(2.1854*sqrt((1/12)+(1/12))) T= 0.0083/0.8922 T= 0.0093 4) Ho will be rejected if T>t which is equal to 1.717 as shown in step 2 5) However, T= 0.0093 which less than 1.717 thus we will reject the null hypothesis. 6) Therefore, there is not enough evidence to say that the average price of pain medication at Walgreens Pharmacy is greater than the average price of pain medication at CVS/Caremark pharmacy.

Overall Project Summary

In summary, we have concluded that the average price of pain medications in Walgreens and CVS/Caremark pharmacy are not that different. The confidence interval for the difference in two population means from phase 2 was (-1.8421, 1.8587) which if we recall meant that there was no difference in the average price of pain medications between the two pharmacies. This result was further bolstered by our hypothesis test for the difference between the mean prices of pain medication in Phase 3. This project would be useful for drug companies to make sure whether pain medications they have developed is competitive in the market Pharmacies that sell these drugs would be interested in this data as well.