An operations manager of a computer ship maker is in the process of selecting a new machine to replace several older ones. Although technological innovations have improved the production process, it is quite common for the machines to produce defective ships. The operation manager must choose between two machines. The cost of machine A is several thousand dollars greater than the cost of machine B. After an analysis of the costs it was determined that machine A is warranted provided that its defective rate is more than 2% less than that of machine B. To help decide both machines are used to produce 200 chips each. Each chip was examined and whether it was defective or not was recorded. Should the operations manager select machine A?

Use a 5% significance level

machine A

not defective: 189

defective: 11

machine B

not defective: 178

defective: 22