Suppose that you work for a newly restructured automotive company with nearly 100,000 employees. You are in charge of purchasing engines from an overseas supplier. Company policy is that you purchase 500 engines each month to be placed into cars on the assembly line. Your overseas supplier of engines guarantees that no more than 0.9% of the new engines shipped to you will fail a simple electrical test. To check out themonthly shipment of the 500 engines you randomly select and test 50 of these engines, and you find that 1 isdefective. Do you think that the supplier has met the guarantee?

Suppose that you work for a newly restructured automotive company with nearly 100,000 employees. You are in charge of purchasing engines from an overseas supplier. Company policy is that you purchase 500 engines each month to be placed into cars on the assembly line. Your overseas supplier of engines guarantees that no more than 0.9% of the new engines shipped to you will fail a simple electrical test. To check out themonthly shipment of the 500 engines you randomly select and test 50 of these engines, and you find that 1 isdefective. Do you think that the supplier has met the guarantee?

The z-value is more than 3 standard deviations from the mean. So, we conclude that the overseas supplier has not met the guarantee.

The z-value is less than 3 standard deviations from the mean. So, we cannot conclude that the overseas supplier has not met the guarantee.

Neither of these is the correct answer.