Case Problem: Metropolitan Research, Inc.

Metropolitan Research, Inc., a consumer research organization, conducts surveys designed to evaluate
a wide variety of products and services available to consumers. In one particular study, Metropolitan
looked at consumer satisfaction with the performance of automobiles produced by a major Detroit
manufacturer. A questionnaire sent to owners of one of the manufacturer’s full-sized cars revealed
several complaints about early transmission problems. To learn more about the transmission failures,
Metropolitan used a sample of actual transmission repairs provided by a transmission repair firm in
the Detroit area. The following data show the actual number of miles driven for 50 vehicles at the
time of transmission failure.

Managerial Report
1. Use appropriate descriptive statistics to summarize the transmission failure data.
Miles

Mean 73340.3
Standard Error 3521.210059
Median 72705
Mode #N/A
Standard Deviation 24898.71511
Sample Variance 619946014.1
Kurtosis 0.167126212
Skewness 0.260117974
Range 113048
Minimum 25066
Maximum 138114
Sum 3667015
Count 50
Confidence Level(95.0%) 7076.13654
1st Quartile 60421
3rd Quartile 86575

There is only one outlier in from the box plot.

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2. Develop a 95% confidence interval for the mean number of miles driven until transmission failure
for the population of automobiles with transmission failure. Provide a managerial interpretation
of the interval estimate.
Miles

Mean 73340.3
Standard Error 3521.210059
Median 72705
Mode #N/A
Standard Deviation 24898.71511
Sample Variance 619946014.1
Kurtosis 0.167126212
Skewness 0.260117974
Range 113048
Minimum 25066
Maximum 138114
Sum 3667015
Count 50
Confidence Level(95.0%) 7076.13654
1-0.95 = 0.05
Sum of 0.05 both sides so 0.025 each side of the normal distribution curve.
Normal Distribution inverse = 1.95996398

Lower Confidence Limit = Mean – Variance(1.95996398) = 66438.8551

Upper Confidence Limit = Mean + Variance(1.95996398) = 80241.7449

The expected transmission failure of the sample is between the range 66438.8551 to 80241.7449.
Below 66438.8551 miles, it’s not acceptable.

3. Discuss the implication of your statistical findings in terms of the belief that some owners of the
automobiles experienced early transmission failures.
- Based on the sample given, 7 out of 50 cars had early transmission failures and 14% of the
population had early transmission failures.
- Lowest – 25066
- Mean – 73340.3
- Highest – 138114
- Eventually, according to the analysis carried out, it can be established that 39.08% of the 50
vehicles surveyed presented early transmission failures, based on the miles travelled before
the faults occurred, not including the value of the lower limit of the interval that it was
established for the population mean.

4. How many repair records should be sampled if the research firm wants the population mean
number of miles driven until transmission failure to be estimated with a margin of error of 5000
miles? Use 95% confidence.
Z(α/2) = Z(0.05/2) = 1.959964
Standard Deviation/SQRT(N) = 2551.0204
SQRT(N) = 24898.7151084352/2551.020408 = 9.760296
N = (9.760296)^2 = 95.2633843

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 So, 95.2633843 repair records should be sampled.

5. What other information would you like to gather to evaluate the transmission failure problem
more fully?
- When providing mileage data before the transmission failure occurs, add the time the vehicle
has been in operation.
- Collect information about the type of mechanical failures that the vehicle presents
simultaneously with the transmission.
- Levels of transmission failures throughout the automotive industry is relative to miles/time of
use.
- Collect the information based on larger samples which is a more representative group of the
automobile population.