Let p be the true proportion of defectives.
Hypothesized proportion, p = 5/100 = 0.05
Null hypothesis H0: p = 0.05
Alternative hypothesis H1: p > 0.05
Sample proportion, = 18/300 = 0.06
Standard error of proportion, SE = = 0.01258
Test statistic, z = ( - p) / SE = (0.06 - 0.05) / 0.01258 = 0.79
P-value = Probability that line should be shut down and repaired = P(p > 0.06) = P(z > 0.79) = 0.2148
Since P-value is greater than alpha=0.01, we fail to reject H0.
Type 2 error is the probability to fail to reject H0 when in reality H0 is false.
Since we fail to reject H0, we may have made a type 2 error, if in reality H0 is false.
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