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# A company has purchased 50K electrical switches and has been

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Current Student
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A company has purchased 50K electrical switches and has been [#permalink]

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22 Oct 2007, 19:07
This topic is locked. If you want to discuss this question please re-post it in the respective forum.

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?
Manager
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Re: Real life MBA stats question #1 (easy) [#permalink]

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22 Oct 2007, 19:12
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
VP
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Re: Real life MBA stats question #1 (easy) [#permalink]

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22 Oct 2007, 19:15
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?

Not sure if this is what you are looking for

I would say its in the Mean + 1SD range ....

|-2.3%-|---13.6%---|----34.1%----M----34.1%----|---13.6%---|-2.3%-|

Current Student
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Re: Real life MBA stats question #1 (easy) [#permalink]

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22 Oct 2007, 19:17
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.
VP
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Re: Real life MBA stats question #1 (easy) [#permalink]

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22 Oct 2007, 19:23
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.
Current Student
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Re: Real life MBA stats question #1 (easy) [#permalink]

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22 Oct 2007, 19:23
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?

Not sure if this is what you are looking for

I would say its in the Mean + 1SD range ....

|-2.3%-|---13.6%---|----34.1%----M----34.1%----|---13.6%---|-2.3%-|

Close, but much more than 1SD here.
VP
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Re: Real life MBA stats question #1 (easy) [#permalink]

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22 Oct 2007, 19:28
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?

Not sure if this is what you are looking for

I would say its in the Mean + 1SD range ....

|-2.3%-|---13.6%---|----34.1%----M----34.1%----|---13.6%---|-2.3%-|

Close, but much more than 1SD here.

Shoot ...shoot............Mean + 2SD
Current Student
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Re: Real life MBA stats question #1 (easy) [#permalink]

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22 Oct 2007, 19:46
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?

Not sure if this is what you are looking for

I would say its in the Mean + 1SD range ....

|-2.3%-|---13.6%---|----34.1%----M----34.1%----|---13.6%---|-2.3%-|

Close, but much more than 1SD here.

Shoot ...shoot............Mean + 2SD

(1) X = # of defective switches out of 500, where each switch has a .001 probability of being defective --> 500*.001 ---> .5

(2) SD of X = sqrt {500*.001*(1-.001)} ---> .7067

(3) The observation X=4 is (4-.5)/.7067 ---> 4.955 SD

Final answer, four defectives is a highly unlikely result !!! Take one more sample or send the switches back to the manufacturer.

VP
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Re: Real life MBA stats question #1 (easy) [#permalink]

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22 Oct 2007, 19:50
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?

Not sure if this is what you are looking for

I would say its in the Mean + 1SD range ....

|-2.3%-|---13.6%---|----34.1%----M----34.1%----|---13.6%---|-2.3%-|

Close, but much more than 1SD here.

Shoot ...shoot............Mean + 2SD

(1) X = # of defective switches out of 500, where each switch has a .001 probability of being defective --> 500*.001 ---> .5

(2) SD of X = sqrt {500*.001*(1-.001)} ---> .7067

(3) The observation X=4 is (4-.5)/.7067 ---> 4.955 SD

Final answer, four defectives is a highly unlikely result !!! Take one more sample or send the switches back to the manufacturer.

OK I give up
CEO
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Re: Real life MBA stats question #1 (easy) [#permalink]

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22 Oct 2007, 21:56
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?

Not to trust this supplier.
GMAT Club Legend
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23 Oct 2007, 02:16
inference: I won't be getting my switches from this company.
Current Student
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03 Nov 2007, 13:11
You guys ready for a few more of these problems?
Manager
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03 Nov 2007, 13:30
apart from these 500 the rest contains less number of defected switches..since these have been picked up randomly....!!!!!!!!!!!
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Re: Real life MBA stats question #1 (easy) [#permalink]

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03 Nov 2007, 13:47
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.
Re: Real life MBA stats question #1 (easy)   [#permalink] 03 Nov 2007, 13:47
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