Anderson Area Hospital administration have recently received an internal audit

report indicating that 15% of all patient bills contain an error of one form or another.

After spending considerable effort to improve the hospital's billing process, the

administrators are convinced that things have improved. They believe that the new

error rate is somewhere closer to 0.05.

A. Suppose that recently the hospital randomly sampled 10 patient bills and

conducted a thorough study to determine whether an error exists. It found 3 bills

with errors. Assuming that managers are correct that they have improved the error

rate to 0.05, what is the probability that they would find 3 or more errors in a sample

of 10 bills?

B. Referring to part A, what conclusion would you reach based upon the probability

of finding 3 or more errors in the sample of 10 bills?