1.Does increased employee training lead to higher quality in goods and services?
ID: 3021543 • Letter: 1
Question
1.Does increased employee training lead to higher quality in goods and services? Consider a null hypothesis (H0) that training has no effect on quality, versus the alternative hypothesis (Ha) that training will lead to an increase in product or service quality.
Given this situation, an organization can make two decisions: provide employee training (i.e. reject the null hypothesis), or fail to provide training (i.e. do not reject the null hypothesis). Explain, in the context of this example, the meaning of Type I and Type II errors.
2
An industrial training program suggests in a brochure that its graduates have a starting average salary of at least $80,000. The standard deviation of salaries is $14,000.
In order to make an educated decision regarding this training program, a friend of yours took a random sample of starting salaries for 90 graduates. The average salary in this random sample was $76,000.
Is there sufficient evidence, given this sample data, to reject the null hypothesis? Use a significance level of 5%.
Calculate the probability of a Type II error if the average starting salary for training program graduates was actually $75,000.
Explanation / Answer
1.
A type I error is incorrectly rejecting a true null hypothesis.
Hence, in this case, it is incorrectly concluding that training will lead to an increase in product or service quality, when in fact, it has no effect. Hence, they provided training when in fact, they don't need to.
A type II error is incorrectly failing to reject a false null hypothesis.
Hence, in this case, it is incorrectly concluding that training will have no effect on quality, when in fact, it training will lead to an increase in product or service quality. Hence, they didn't training when in fact, it would be better if they did.
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