Arco Manufacturing makes electronic pagers. As part of its quality efforts, the company wishes to estimate the
Question:
Arco Manufacturing makes electronic pagers. As part of its quality efforts, the company wishes to estimate the mean number of days the pager is used before repair is needed. A pilot sample of 40 pagers indicates a sample standard deviation of 200 days. The company wishes its estimate to have a margin of error of no more than 50 days, and the confidence level must be 95%.
a. Given this information, how many additional pagers should be sampled?
b. The pilot study was initiated because of the costs involved in sampling. Each sampled observation costs approximately $10 to obtain. Originally, it was thought that the population’s standard deviation might be as large as 300. Determine the amount of money saved by obtaining the pilot sample. (Hint:
Determine the total cost of obtaining the required samples for both methods.)
Step by Step Answer:
Business Statistics A Decision Making Approach
ISBN: 9780136121015
8th Edition
Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry, Kent D. Smith