Because of high production-changeover time and costs, a director of manufacturing must convince management that a proposed manufacturing method reduces costs before the new method can be implemented. The current production method operates with a mean cost of $220 per hour. A research study will measure the cost of the new method over a sample production period.
a. Develop the null and alternative hypothesis most appropriate for this study.
b. Comment on the conclusion when H0 cannot be rejected.
c. Comment on the conclusion when H0 can be rejected.
d. What is the Type I error in this situation? What are the consequences of making this error?
e. What is the Type II error in this situation? What are the consequences of making this error?