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CASE PROBLEM 1: QUALITY ASSOCIATES, INC. Quality Associates, Inc., a consulting firm, advises its clients about sampling and statistical procedures that can be used to control their manufacturing processes. In one particular application, a client gave Quality Associates a sample of 800 observations taken during a time in which that client's process was operating satisfactorily. The sample standard deviation for these data was 21; hence, with so much data, the popu- lation standard deviation was assumed to be 21. Quality Associates then suggested that random samples of size 30 be taken periodically to monitor the process on an ongoing basis. By analyzing the new samples, the client could quickly learn whether the process was operating satisfactorily. When the process was not operating satisfactorily, correct- ive action could be taken to eliminate the problem. The design specification indicated the mean for the process should be 12. The hypothesis test suggested by Quality Asso- ciates follows. H: = 12 H,:μή 12 Corrective action will be taken any time H, is rejected. The following samples were collected at hourly intervals during the first day of opera- tion of the new statistical process control procedure. These data are available in the data set Quality
11.98 12.05 12.29 11.96 12.22 12.47 12.37 12.25 12.04 12.03 12.17 12.30 12.18 11.97 12.17 11.85 12.30 11.75 11.96 11.95 11.89 12.24 11.92 12.37 11.94 11.97 12.23 11.88 11.93 12.15 12.22 12.25 Managerial Report 1. Conduct a hypothesis test for each sample at the .01 level of significance and determine what action, if any, should be taken. Provide the test statistic and p-value for each test. 2. Compute the standard deviation for each of the four samples. Does the assumption of .21 for the population standard deviation appear reasonable? 3. Compute limits for the sample mean i around p = 12 such that, as long as a new sam- ple mean is within those limits, the process will be considered to be operating satis- factorily. If i exceeds the upper limit or ifï is below the lower limit, corrective action will be taken. These limits are referred to as upper and lower control limits for quality control purposes. 4. Discuss the implications of changing the level of significance to a larger value. What mistake or error could increase if the level of significance is increased?
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