The process that is used to produce a complex component used in medical instruments typically results in defective rates in the 40% range. Recently, two innovative processes have been developed to replace the existing process. Process 1 appears to be more promising, but it is considerably more expensive to purchase and operate than process 2. After a thorough analysis of the costs, management decides that it will adopt process 1 only if the proportion of defective components it produces is more than 8% smaller than that produced by process 2. In a test to guide the decision, both processes were used to produce 300 components. Of the 300 components produced by process 1, 33 were found to be defective, whereas 84 out of the 300 produced by process 2 were defective. Conduct a test using a significance level of 1% to help management make a decision.

  • CreatedFebruary 03, 2015
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