The Production Manager at Hydro-Corn Farming, Inc. is considering hiring 15 additional laborers to harvest the corn supply during the peak season, as supply and demand are requiring. Currently, 50 laborers are harvesting a total of 1,000 ears of corn per hour. Laborers make $15.00 on overtime per hour. Laborers are having to work 3 hours of overtime per day 4 days a week. Would hiring 15 additional laborers 4 days a week at $8.00 per hour working 6 hour shifts benefit the company more versus paying overtime to current laborers?
By hiring an additional 15 laborers, would this reflect a savings during peak harvesting time, or would it indeed cost the company more money? By analyzing the known data using the 5-Point Hypothesis testing procedure, the Production Manager should easily be able to identify a cost savings one way or the other. Only one thing is certain, and that is to meet the deadline of the marketplace wholesalers, the corn needs to be picked much quickly than it is now, but by ensuring that the proper cost savings effort has been properly identified for this years' peak season.
This solution conducts a five-step hypothesis test by presenting the null and alternative hypothesis, stating the decision rule, calculating the test statistic and comparing it to the p-value. A decision is made to either accept or reject the null hypothesis.