Computer Chips

A manufacturer of computer chips has a computer hardware company as its largest customer.

The computer hardware company requires all of its chips to meet specifications of 1.2 cm. The

vice-president of manufacturing, concerned about a possible loss of sales, assigns his production

manager the task of ensuring that chips are produced to meet the specification of 1.2 cm. Based

on the production run from last month, a 95% confidence interval was computed for the mean

length of a computer chip resulting in: 95% confidence interval: (0.9 cm, 1.1 cm)

1. What are the elements that the production manager should consider in determining his

company’s ability to produce chips that meet specifications? The elements that the

production manager should consider in determining his company’s ability to produce chips

that meet specifications are the mean length of the computer chips produced, the standard

deviation, and the 95% confidence interval.

2. Do the chips produced meet the desired specifications? The chips produced do not meet

the desired specifications based on the 95% confidence interval: (0.9 cm, 1.1 cm). The

desired specification is for the length of a computer chip to be 1.2 cm and that measurement

falls outside of the 95% confidence interval computed. On average, the specified length is

not met for production.

3. What reasons should the production manager provide to the vice-president to justify

that the production team is meeting specifications? The reasons that the production

manager should provide to the vice-president to justify that the production team is meeting

specifications is that the confidence interval provided does not do a good job of representing

the actual mean length of the computer chip. “Claims that confidence intervals yield an
 index of precision, that the values within them are plausible, and that the confidence

coefficient can be read as a measure of certainty that the interval contains the true value, are

all fallacies and unjustified by confidence interval theory.” (Morey, Hoekstra, Rouder, Lee,

& Wagenmakers, 2016) There are several theories that have issues with the validity of

confidence intervals. A vast majority of those theories point out errors that can occur during

the statistical analysis. For example, in this scenario, the measurements provided could be

biased. The data could also have a few outliers that substantially affect the mean length of

the computer chip. For the confidence interval to be a good representation of the data, the

data has to be approximately normal. If the data is skewed or has a significant amount of

outliers then the confidence interval may not capture the true mean. Based on the previous

statements, the production manager can argue that the computer chips produced do meet the

specifications even though the confidence interval of (0.9 cm, 1.1 cm) does not include the

targeted 1.2 cm measurement.

4. How will this decision impact the chip manufacturer’s sales and net profit? If the

specified requirement for the length of 1.2 cm for the computer chip is not met then the

manufacturer of the computer chip takes the risk of losing its largest customer. This could

ultimately cause the manufacturer of the computer chip to go out of business. The computer

chip manufacturer has to figure out a way to produce the computer chip at or very close to

the 1.2 cm specification, because the computer hardware company can easily go out and find

a manufacture that can produce the computer chip to its specification. If the manufacturer is

actually producing the computer chip at the computer hardware company’s specifications,

then the manufacturer must conduct a better statistical analysis that accurately proves the

computer chips are 1.2 cm in length.

 References

Morey, R. D., Hoekstra, R., Rouder, J. N., Lee, M. D., & Wagenmakers, E. (2016). The fallacy

of placing confidence in confidence intervals. Psychonomic Bulletin & Review, 23(1), 103-

123. doi:http://dx.doi.org.ezproxy.snhu.edu/10.3758/s13423-015-0947-8