Author Question: Suppose a pickup and delivery company states that their packages arrive within two days or less on ... (Read 81 times)

tsand2 · **on:** Jun 24, 2018

Suppose a pickup and delivery company states that their packages arrive within two days or less on average. You want to find out whether the actual average delivery time is longer than this. You conduct a hypothesis test.
a. Set up the null and alternative hypotheses.
b. Suppose you conclude wrongly that the company's statement about average delivery time is within two days. What type of error is being committed and what is the impact of that error?
c. Suppose you conclude wrongly that the delivery company's average time to delivery is in fact longer than two days. What type of error did you commit and what is the impact of this error?
d. Which error is worse from the company's standpoint, a Type I or a Type II error? Why?
e. Which error is worse from a consumer standpoint, a Type I or a Type II error? Why?

Question 2

Dummy variables are variables that can take on only two values (namely, 0 or 1) and that are used to indicate the absence or presence of a particular nominal characteristic.
Indicate whether the statement is true or false

kishoreddi · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

a. H0: = 2 days vs. H1: > 2 days
b. You did not reject the company's claim but you should have. This is a Type II error. It is a missed opportunity to say the company's claim is wrong. The impact is that people will not get their packages delivered within 2 days on average, and could eventually become dissatisfied.
c. You rejected the company's claim but you should not have. This is a Type I error. You caused a false alarm. The impact is that the company loses its credibility needlessly. This could cause some real problems for the person who made the false alarm.
d. The company does not want to lose its reputation unfairly, so they want to minimize the chance for a Type I error. However, this increases the chance that customers will get their packages delivered later than promised, on average.
e. The consumer wants to know their packages are being delivered as promised (on average), so they want to decrease the chance of a Type II error. However, this increases the chance of a false alarm.

Answer to Question 2

T