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A company has purchased 50K electrical switches and has been [#permalink]
22 Oct 2007, 18:07

A company has purchased 50K electrical switches and has been guaranteed by the supplier that the shipment will contain no more than .1% defectives. A random sample of 500 switches are tested and 4 are defective. Based on this sample, what inference would you make about the suppliers guarantee?

Re: Real life MBA stats question #1 (easy) [#permalink]
22 Oct 2007, 18:12

GMATT73 wrote:

A company has purchased 50K electrical switches and has been guaranteed by the supplier that the shipment will contain no more than .1% defectives. A random sample of 500 switches are tested and 4 are defective. Based on this sample, what inference would you make about the suppliers guarantee?

4/500 or 8/1000 = .8% or 800% increase in defectives. I hope they have an SLA agreement

Re: Real life MBA stats question #1 (easy) [#permalink]
22 Oct 2007, 18:15

GMATT73 wrote:

A company has purchased 50K electrical switches and has been guaranteed by the supplier that the shipment will contain no more than .1% defectives. A random sample of 500 switches are tested and 4 are defective. Based on this sample, what inference would you make about the suppliers guarantee?

Re: Real life MBA stats question #1 (easy) [#permalink]
22 Oct 2007, 18:17

yuefei wrote:

GMATT73 wrote:

A company has purchased 50K electrical switches and has been guaranteed by the supplier that the shipment will contain no more than .1% defectives. A random sample of 500 switches are tested and 4 are defective. Based on this sample, what inference would you make about the suppliers guarantee?

4/500 or 8/1000 = .8% or 800% increase in defectives. I hope they have an SLA agreement

yuefei, you need to use the mean and the SD to for binomial distribution to make the inference here.

Re: Real life MBA stats question #1 (easy) [#permalink]
22 Oct 2007, 18:23

GMATT73 wrote:

A company has purchased 50K electrical switches and has been guaranteed by the supplier that the shipment will contain no more than .1% defectives. A random sample of 500 switches are tested and 4 are defective. Based on this sample, what inference would you make about the suppliers guarantee?

Based on the samples taken,
4/500 = 8/1000 = 0.8% are defective

This is 8 times the guaranteed number. Therefore, you can inter that the statement of guarantee is not accurate.

Re: Real life MBA stats question #1 (easy) [#permalink]
22 Oct 2007, 18:23

trivikram wrote:

GMATT73 wrote:

A company has purchased 50K electrical switches and has been guaranteed by the supplier that the shipment will contain no more than .1% defectives. A random sample of 500 switches are tested and 4 are defective. Based on this sample, what inference would you make about the suppliers guarantee?

Re: Real life MBA stats question #1 (easy) [#permalink]
22 Oct 2007, 18:28

GMATT73 wrote:

trivikram wrote:

GMATT73 wrote:

A company has purchased 50K electrical switches and has been guaranteed by the supplier that the shipment will contain no more than .1% defectives. A random sample of 500 switches are tested and 4 are defective. Based on this sample, what inference would you make about the suppliers guarantee?

Re: Real life MBA stats question #1 (easy) [#permalink]
22 Oct 2007, 18:46

trivikram wrote:

GMATT73 wrote:

trivikram wrote:

GMATT73 wrote:

A company has purchased 50K electrical switches and has been guaranteed by the supplier that the shipment will contain no more than .1% defectives. A random sample of 500 switches are tested and 4 are defective. Based on this sample, what inference would you make about the suppliers guarantee?

Re: Real life MBA stats question #1 (easy) [#permalink]
22 Oct 2007, 18:50

GMATT73 wrote:

trivikram wrote:

GMATT73 wrote:

trivikram wrote:

GMATT73 wrote:

A company has purchased 50K electrical switches and has been guaranteed by the supplier that the shipment will contain no more than .1% defectives. A random sample of 500 switches are tested and 4 are defective. Based on this sample, what inference would you make about the suppliers guarantee?

Re: Real life MBA stats question #1 (easy) [#permalink]
22 Oct 2007, 20:56

GMATT73 wrote:

A company has purchased 50K electrical switches and has been guaranteed by the supplier that the shipment will contain no more than .1% defectives. A random sample of 500 switches are tested and 4 are defective. Based on this sample, what inference would you make about the suppliers guarantee?

Re: Real life MBA stats question #1 (easy) [#permalink]
03 Nov 2007, 12:47

GMATT73 wrote:

A company has purchased 50K electrical switches and has been guaranteed by the supplier that the shipment will contain no more than .1% defectives. A random sample of 500 switches are tested and 4 are defective. Based on this sample, what inference would you make about the suppliers guarantee?

definitely the immidiate impression is not good but its not enough to reach at any conclusion. we cannot say anything cuz we do not know the sample is normally distributed.

gmatclubot

Re: Real life MBA stats question #1 (easy)
[#permalink]
03 Nov 2007, 12:47

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