Dartmouth Distribution Warehouse makes deliveries of a large number of products to its customers. To keep its customers happy and satisfied, the company’s policy is to deliver on time at least 90% of all the orders it receives from its customers. The quality control inspector at the company quite often takes samples of orders delivered and checks to see whether this policy is maintained. A recent sample of 90 orders taken by this inspector showed that 75 of them were delivered on time.
a. Using a 2% significance level, can you conclude that the company’s policy is maintained?
b. What will your decision be in part a if the probability of making a Type I error is zero? Explain.