Arco Manufacturing makes electronic video recorders.

As part of its quality efforts, the company wishes to estimate the mean number of days a video recorder is used before it needs repair. A pilot sample of 40 video recorders 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 video recorders 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.)