Duro Bricks Case Essay

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Rochelle Phillips has to prepare a report to the management on the new production process she had been testing at Duro Industries. Duro was facing increased competition from foreign firms and there were fundamental ways in which brick companies managed their production process. Foreign firms were using vector drives in moving products through the process. The CEO of Duro wanted Rochelle to evaluate the feasibility of undertaking this new approach. Rochelle decided to compare two plants for 50 days, Memphis plant-which will have the vector drive and Birmingham plant-which will use the existing system and prepare a report. The financial analysts believe that the purchase can be justified if the equipment leads to the average increase in production of atleast 10,000 bricks per day. Since we have to check whether the difference between the mean value of the bricks per day at Memphis plant and Birmingham plant is greater than 10000(for purchase to be justified), we will use hypothesis testing for means and compare the sampling distribution of the mean value of bricks produced in a day. This method is the typical method to solve these kind of problems. Data available is Plant Total Bricks produced in 50 days S (standard deviation) x̄ (mean) Memphis 7484500 3402.46 149690 Birmingham 6902350 3364.68 138047 Hypothesis test In a hypothesis test we assume Ho to be true and try to find evidence that shows otherwise. We test the claim using a level of confidence. Suppose we take 5% level of significance in this case. We choose a test statistic, choose a rejection region, test the statistic and make a conclusion. State Hypothesis Ho : µ1 - µ2 =< 10000 (µ1 and µ2 are the mean bricks produced in a day in Memphis n Birmingham plants) H1 : µ1 - µ2 > 10000 (Ho is null hypothesis and H1 is alternative hypothesis) Choosing a Test Statistic Whenever sample size is greater

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