EC 116 - STATISTICS FOR ECONOMIST DEPARTMENT OF ECONOMICS Type I and Type II Error A company manufactures a liquid kitchen cleaning

wax which sells in cans marked "300 grams net weight." It is known from long experience that the variability of the process is stable and well established at = 5 grams. The cans are filled by machine, and the company makes every effort to control the mean net weight at the 300-gram standard. However, small errors occur in the machine settings and parts wear, and the mean fill sometimes varies more or less widely from the desired standard. Small departures - 1 gram or less - from standard are of no consequence, but increasingly larger departures in either direction cause some concern. Overfilling means losses to the company while underfilling results in loss to consumers. In trying to control the desired mean fill of 300 grams, each hour during the production runs, the company takes a random sample of 25 cans from the hour's production and calculates the mean weight. The company has specified this criterion:

Consider the process to be out of control if X is either 297 grams or less, or if it is 303 grams more; consider the process to be in control if X falls between 297 and 303 grams.

When the process is judged to be out of control, it is shut down immediately and a plant engineer is sent in to find out what is wrong and puts it back in control. Otherwise, it is allowed to continue operating without interruption. The company wants to test for each submitted lot that the mean weight is 300 grams against the alternative that is is not equal to 300 grams.

True Value of

Probability of Type II Error () 0.0013 0.0228 0.1587 0.5000 0.8413 0.9772 0 b/c Ho is True 0.9772 0.8413 0.5000 0.1587 0.0228 0.0013

Probability of Accepting Ho (1 - ) 0.0013 0.0228 0.1587 0.5000 0.8413 0.9772 0.9974 0.9772 0.8413 0.5000 0.1587 0.0228 0.0013

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