Hypothesis testing in the real business environment.

Beside some expansions of hypothesis testing which have been mentioned in the previous
sections, it is also often applied in the business environment, mostly, in manufacturing
plants. When a business alters its operations, importing new machines, process for the
production, hypothesis testing will help it to foresee or predict the risk of manufacturing the
proportion of damaged or defective goods. Thus, it can help the business owners to make
the right decisions for their own corporation.

Hypotheses testing allows specialists, researchers, or business analysts to examine the

tendency to happen of a thing before putting them into action or implementation. From that, it
will instruct them what they should do to avoid mistakes or bad results.

For example, if a manufacturing company wants to test the amount of defective items after
applying a new machine, hypothesis testing could be the method that helps the company. To
be specific, the business analyst of that company can measure the mean number of defects
before and after utilizing the tool in the manufacturing process.
In this case, the hypotheses testing can be demonstrated as follows:

● Null hypotheses: H0: μafter = μbefore (there is no changes occurring in the mean
of defective goods before and after using the machine)
● Alternative hypotheses: HA: μafter ≠ μbefore (there is a difference in the mean of
defective goods before and after using the machine)

If the p-value of the test is less than some significance level (for a=.05), the business can
reject the null hypothesis and conclude that the new applied tool leads to the alterations in
the number of defective goods produced each month.