The number of potential sites for the first-stage test in Exercise 11.66 is quite large and the readings can be expensive. Accordingly, the test is conducted with a sample of 25 observations. Because the second-stage cost is high, the significance level is set at 1%.
A financial analysis of the potential profits and costs reveals that if the mean wind velocity is as high as 25 mph, the windmill would be extremely profitable.
Calculate the probability that the first-stage test will not conclude that the site is feasible when the actual mean wind velocity is 25 mph. (Assume that σ is 8.)
Discuss how the process can be improved.

  • CreatedFebruary 03, 2015
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