Question

Suppose a new production method will be implemented if a hypothesis test supports the conclusion that the new method reduces the mean operating cost per hour.

a. State the appropriate null and alternative hypotheses if the mean cost for the current production method is per hour.

:	- Select your answer -≥≤<>=≠
:	- Select your answer -≥≤<>=≠

b. What is the Type I error in this situation? What are the consequences of making this error?

Claiming - Select your answer -≥≤<>=≠ when the new method - Select your answer -does notreally would lower costs. A mistake could be implementing the method when it - Select your answer -does notdoes help.

c. What is the Type II error in this situation? What are the consequences of making this error?

Claiming - Select your answer -≥≤<>=≠ when the new method - Select your answer -does notreally would lower costs. This could lead to not implementing a method that - Select your answer -would notwould lower costs.

Answer 1

(a)

Let C shows the mean cost for the current production method.

The null hypothesis is:

b:

Type I error is the probability of rejecting the true null hypothesis.

Claiming < when the new method does not lower costs.

A mistake could be implementing the method when it does not help.

c:

Type II error is the probability of fail to reject the false null hypothesis.

Claiming = when the new method really would lower costs. This could lead to not implementing a method that would lower costs.