A manufacturer of computer chips has a computer hardware company as its largest

Question

A manufacturer of computer chips has a computer hardware company as its largest customer. The computer hardware company requires all of its chips to meet specifications of 1.2 cm. The vice-president of manufacturing, concerned about a possible loss of sales, assigns his production manager the task of ensuring that chips are produced to meet the specification of 1.2 cm. Based on the production run from last month, a 95% confidence interval was computed for the mean length of a computer chip resulting in: 95% confidence interval: (0.9 cm, 1.1 cm)

1. What are the elements that the production manager should consider in determining his company’s ability to produce chips that meet specifications?

2. Do the chips produced meet the desired specifications?

3. What reasons should the production manager provide to the vice-president to justify that the production team is meeting specifications?

4. How will this decision impact the chip manufacturer’s sales and net profit?

Explanation / Answer

1. The total number of chips produced in last month, the average leangth of chips produced and standard deviation of length of chips produced.

2. The chips is slightly shorter than desired specifications.

3. From confidence interval, the production manager with 95% confidence can say that the true population of chips with mean length is between 0.9 cm to 1.1 cm. Therefore, a mean length of 1.2 cm is always possible but unlikely. Since, manager has collected data for last one month only, he can say that for the true population interval to contain the specified length, data for more months should be included.

4. Chip manufacturer's sales and net profit might be at stake, if any customer randomly check the length of the chip and find it to not meet the required length.

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