The vice president of operations for a veterinary supply company has designed a new quality control process that she believes will significantly reduce the reject rate in the packing line for bottles of equine glucosamine from its historical level of 32 units per 1,000. She now wants to implement a pilot of this process and use it to see whether the data support her belief.
What is the null hypothesis for this test?
In the context of this scenario, what would be the consequences of making a Type I error?
In the context of this scenario, what would be the consequences of making a Type II error?
Playbill Magazine had reported that the mean annual household income of its readers is $119,155. The most recent random sample of 80 households taken from its subscription list had a mean annual household income of $124,450. Past studies have indicated that the standard deviation of household income is $30,000. Based on this information, can Playbill's executives conclude that there has been a significant shift in the average annual income of its readers? (Use alpha = .05).
The solution shows how to perform a hypothesis test using one sample for two different scenarios in attached Word and Excel documents.