Statistical Methods in Quality Management 23
found to be good. Formulate the appropriate hypotheses and test them using an = 0.05
significance level. Explain your results.
The hypothesis which requires testing is:
H0: Proportion of good product ≥ 95
H1: Proportion of good product < 95
Since the value of the test statistic is -0.754, we cannot reject the null hypothesis and the
manager can conclude that there is no statistical evidence that the population proportion is less
than 95 percent.
20. Rabbitfoot Community Bank makes a large number of home equity loans each year.
The vice president of loan administration wishes to determine if their time for paperwork
processing is lower than the average time of their top competitor. Data for a sample of 30
loans taken at Rabbitfoot Bank are provided in the Ch06Data Excel workbook. Data
obtained from competitor of 36 applications are also provided in the workbook.
a) Use the Excel Descriptive Statistics tool to find the mean and variance of each data set.
b) Test the null hypothesis that his bank’s processing time is greater than or equal to the
competitor’s average, versus the alternative hypothesis that the bank’s time is less than the
competitor at the 5 percent significance level. Use the z-Test: Two Sample Assuming Equal
Variances from the Data Analysis menu in Excel.
See the instructor’s Excel solution file Problem 6.20.
To conduct this hypothesis test for comparing the processing time, select t–test: Two-Sample
Assuming Equal Variances from the Data Analysis menu.
Let 𝜇1= the mean of the Rabbitfoot Bank data and 𝜇2=the mean of the industry data
The hypothesis may be stated as:
𝐻1: 𝜇1− 𝜇2≥0