Assignment 2 Question 4

Question 4

A conversation with several managers in the order processing department has revealed that about 1 out of every 30 orders for conference phone setups is unusual. How many previous orders should you inspect if you want to have a 95% level of certainty that you covered all variations? What criteria would you use to select these orders? Be sure to show your work.

Solution

• Probability of unusual order (p) = 1/30
• Acceptable level of error (a) = 1-.95 <==> .05
• Certaintiy level (z-score, z) = 1.96

Sample Size Formula: p(1-p)((z/a)^2)

Substituting above values: (1/30)(29/30)((1.96/.05)^2) = 49.513955556

From the above calculation, you should inspect 50 orders, ensuring that they were randomly selected for inspection.