Using IDEA in Attributes Sampling $-$ Elm Manufacturing Company $($Shared Information for Exercises $79$ to $81)$

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Elm Manufacturing Company $($ELM$)$ is a small manufacturer of backpacks located in Rochelle, Illinois. You are testing controls related to the authorization of sales made to customers on account and are interested in ensuring that goods are only shipped to customers following a formal credit approval.You have access to ELM's electronic records $($via the "Sales $2023-4$th Quarter" dataset provided below$).$ Detailed information about ELM, instructions for accessing datasets, and a data directory for data sets can be found below.

NOTE: The Sales $20234$th Quarter data set contains a total of $410$ transactions; because you are only examining the credit approval for goods that have been shipped, you would only examine orders through Number $17383($a total of $388$ shipments$).$

Required Data Files:

Module E $($click to download a $.$zip file$)$

Exercise E$\mathrm{.}79$ E$\mathrm{.}81$ Student Setup Guide $($click to download a $.$zip file$)$

Note: There are differences in years in the guide, but the solutioning is the same

Module E Text Example $($Documentation$)($click to download a $.$zip file$)$

Module E Exercise $80$ LO E$-2($IDEA Required$)$

Your audit team has established the following parameters for the examination of ELM's control over the authorization of sales:

Population size $388$ shipments

Risk of overreliance $10\%$

Expected population deviation rate $1\%$

Tolerable rate of deviation $6\%$

Required:

Using IDEA, answer the following questions by supplying the required information.

Note: Enter your answers exactly as they appear in IDEA.

Note: Parts $($b$),($c$),$ and $($d$)$ are independent scenarios that affect sample size.

Use IDEA to determine the necessary sample size, given the preceding parameters.

Assume the audit team has decided to increase its reliance on this control and reduce control risk related to the authorization of sales on account. Accordingly, it has decided to reduce the risk of overreliance to $5$ percent. What is the necessary sample size, holding all other factors constant?

Assume that in the past year the audit team noted a greater extent of deviations in the population and decided that an expected population deviation rate of $2$ percent would be more appropriate. What is the necessary sample size, holding all other factors constant?

Assume that the audit team has decided to reduce its reliance on this control and is willing to increase the tolerable rate of deviation from $6$ percent to $8$ percent. What is the necessary sample size, holding all other factors constant?

Based on your results in parts $($b$),($c$),$ and $($d$),$ determine the relationship between various parameters and sample size.