A company manufacturing computer chips finds that 8% of all chips they manufacture are defective. In an effort to decrease the percentage of defective chips, management offers incentives to employees who produce fewer defects. The incentive program is instituted for one month. If its benefits outweigh its costs, the company will continue with the incentive program. a. Write the company's null and alternative hypotheses. b. In this context, describe a Type 1 error and the impact such an error would have on the company. c. In this context, describe a Type 2 error and the impact such an error would have on the company.
A company manufacturing computer chips finds that 8% of all chips they manufacture are defective. In an effort to decrease the percentage of defective chips, management offers incentives to employees who produce fewer defects. The incentive program is instituted for one month. If its benefits outweigh its costs, the company will continue with the incentive program. a. Write the company's null and alternative hypotheses. b. In this context, describe a Type 1 error and the impact such an error would have on the company. c. In this context, describe a Type 2 error and the impact such an error would have on the company.
Holt Mcdougal Larson Pre-algebra: Student Edition 2012
1st Edition
ISBN:9780547587776
Author:HOLT MCDOUGAL
Publisher:HOLT MCDOUGAL
Chapter11: Data Analysis And Probability
Section: Chapter Questions
Problem 8CR
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Transcribed Image Text:A company manufacturing computer chips finds that 8% of all chips they manufacture are
defective. In an effort to decrease the percentage of defective chips, management offers
incentives to employees who produce fewer defects. The incentive program is instituted for one
month. If its benefits outweigh its costs, the company will continue with the incentive program.
a. Write the company's null and alternative hypotheses.
b. In this context, describe a Type 1 error and the impact such an error would have
on the company.
c. In this context, describe a Type 2 error and the impact such an error would have
on the company.
d. The company plans to use an a (alpha) of .05 for their hypothesis test. Describe
an advantage and disadvantage to the company of choosing a = .01 instead.
e. Over the trial month, 7% of the computer chips manufactured were defective.
Management decided that this decrease was statistically significant. Why might
management choose not to permanently institute the employee incentive
program?
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