MyPhone Manufacturing makes smart phones. As part of the company's quality efforts, the company wishes to estimate the mean number of days the phone is used before repair is needed. A pilot sample of 30 phones indicates a sample standard deviation of 200 days. The company wishes its estimate to have a margin of error of no more than 30 days and the confidence level must be 98%.
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 may be as large as 300.
Determine the amount of money saved by obtaining the pilot sample.