Description

1 attachmentsSlide 1 of 1attachment_1attachment_1

Unformatted Attachment Preview

1. Timex Group receives components from a supplier, which it uses in its own production. The

components are delivered in batches of 2000. The supplier claims that there are only 1%

defective components on average from its production. However, production occasionally gets

out of control and a batch is produced with 10% defective components. The firm wishes to

intercept these low-quality batches, so a sample of size 50 is taken from each batch and tested.

If two or more defectives are found in the sample, then the batch is rejected.

a) Describe the two types of error the firm might make in assessing batches of

components.

b) Calculate the probability of each type of error given the data above.

c) If, instead, samples of size 30 were taken and the batch rejected if one or more

rejects were found, how would the error probabilities be altered?

d) The firm can alter the two error probabilities by choice of sample size and rejection

criteria. How should it set the relative sizes of the error probabilities

i. if the product might affect consumer safety?

ii. if there are many competitive suppliers of components?

iii. if the costs of replacement under guarantee are high?

2. Answer true or false, with reasons if necessary.

(a) There is no way of reducing the probability of a Type I error without simultaneously

increasing the probability of a Type II error.

(b) The probability of a Type I error is associated with an area under the distribution of

x assuming the null hypothesis to be true.

(c) It is always desirable to minimize the probability of a Type I error.

(d) A larger sample, ceteris paribus, will increase the power of a test.

(e) The significance level is the probability of a Type II error.

(f) The confidence level is the probability of a Type II error

3. Given the following sample data:

Test the null hypothesis that the true mean is equal to 12, against a two-sided alternative

hypothesis. Draw the distribution of x under the null hypothesis and indicate the rejection

regions for this test.

Purchase answer to see full

attachment

Explanation & Answer:

3 Questions

Tags:

business

economics

statistics

User generated content is uploaded by users for the purposes of learning and should be used following Studypool’s honor code & terms of service.

## Reviews, comments, and love from our customers and community:

This page is having a slideshow that uses Javascript. Your browser either doesn't support Javascript or you have it turned off. To see this page as it is meant to appear please use a Javascript enabled browser.