Right-tailed test

Two-tailed test

The critical value for a left-tailed test is z .

The critical value for a right-tailed test is z .

Since z 2 is equivalent to

z 2 or z 2

the critical values for a two-tailed test are z 2 and z 2.

Example 1 Suppose the standard deviation of the annual incomes of all

government employees is $1,400, and their mean is claimed to be $35,000. Now
a sample of 49 employees has been drawn and their average income is $35,600.
Assuming normality, can you conclude, at the 5% significance level, that the
mean annual income of all government employees is not $35,000?

[S The mean i , while

the mean i . We have

H: 0
This study source was downloaded by 100000787038097 35000, H : 35000, 0.05.
1 on 01-07-2022 19:48:14 GMT -06:00
from CourseHero.com
ch5 3
https://www.coursehero.com/file/116246929/Lecture-Notes-5pdf/
 The value of the test statistic is

3.

Since |3| 1.960 z0.05/2, we reject H0 and accept H1. Thus we can conclude that
the mean annual income of all government employees is not $35,000.

Example 2 The chief financial officer in FedEx believes that including a

stamped self-addressed envelope in the monthly invoice sent to customers will
decrease the amount of time it takes for customers to pay their monthly bills.
Currently, customers return their payments in 24 days on average, with a
standard deviation of 6 days. It was calculated that an improvement of two days
on average would cover the costs of the envelopes (because cheques can be
deposited earlier). A random sample of 220 customers was selected and stamped
self-addressed envelopes were included in their invoice packs. The amounts of
time taken for these customers to pay their bills were recorded and their mean is
21.63 days. Assume that the corresponding population standard deviation is still
6 days. Can the chief financial officer conclude that the plan will be profitable at
the 10% significance level?

[Solution] The plan will be profitable when 22, and not profitable when
= We have
H0: = 22, H1: 22, 0.1.

The value of the test statistic is

-0.91

Since 0.91 1.282 z0.1, we do not reject H0. The chief financial officer
cannot conclude that the plan is profitable at the 10% significance level.

This study source was downloaded by 100000787038097 from CourseHero.com on 01-07-2022 19:48:14 GMT -06:00
ch5 4
https://www.coursehero.com/file/116246929/Lecture-Notes-5pdf/
 Example 3 Suppose that it is known from experience that the standard deviation
of the weights of 8-kg bags of rice packed by a certain factory is 0.16 kg. To
check whether its production is under control on a given day, a manager selected
a random sample of 25 bags and found that their mean weight is 8.081 kg. Test
whether the mean weight of all 8-kg bags packed on that day is more than 8 kg at
the 1% level of significance.

[Solution] Answering yes to whether the mean weight of is more than 8

kg corresponds to while answering no corresponds to = 8 . We
have
H0: = 8, H1: 8, 0.01.

The value of the test statistic is

2.531

Since 2.531 2.326 z0.01, we reject H0 and accept H1. Thus we can conclude
that the mean weight of all 8-kg bags packed on the given day is more than 8 kg.

This study source was downloaded by 100000787038097 from CourseHero.com on 01-07-2022 19:48:14 GMT -06:00
ch5 5
https://www.coursehero.com/file/116246929/Lecture-Notes-5pdf/
Powered by TCPDF (www.tcpdf.org)