The “churn” rate in a subscription business is that rate at which subscribers leave in a given time period. In the US wireless industry, the churn rate is on the order of 10% annually—out of 100 customers at the beginning of a 12-month period, only 90 will be left at the end of the 12-month period.

(a) A 10% churn rate can be represented by a single box with cards marked 0 and 1. Different sized boxes (i.e., different numbers of cards) can also do the job—give several examples.

(b) What resampling process makes these different boxes functionally equivalent?

– sampling with replacement

– sampling without replacement

(c) Describe the resampling steps that you would take to assess the sampling variability of samples of size 250.

(d) Describe the resampling steps that you would take to assess the sampling variability of samples of size 50.

Note: The answers above can be in the form describing the steps in a box model, such as

– put slips of paper in a box

– take a sample

– etc. (only more detailed).