Because of high production-changeover time and costs, a director of manufacturin

Question

Because of high production-changeover time and costs, a director of manufacturing must convince management that a proposed manufacturing method reduces costs before the new method can be implemented. The current production method operates with a mean cost of $220 per hour. A research study will measure the cost of the new method over a sample production period. Develop the null and alternative hypotheses that will help in deciding whether to shut down and adjust the production line. Comment on the conclusion when H_0 cannot be rejected Comment on the conclusion when H_0 can be rejected

Explanation / Answer

1)  

H0: µ220
H1:µ>220

3) If we take a sample and use the sample to test the hypothesis. If population mean calculated from sample mean is significantly greater than 220, then we can reject Ho

2) If above mentioned situation is not true, then Ho cannot be rejected. But at the same time we cannot definitely accept the null hypothesis(most of the times Ho can be accepted).

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