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Developing Null and Alternative Hypotheses Type I and Type II Errors Population Mean: Known Population Mean: Unknown
Developing Null and Alternative Hypotheses Type I and Type II Errors Population Mean: Known Population Mean: Unknown
Hypothesis Testing
Developing Null and Alternative Hypotheses
Type I and Type II Errors
Population Mean: Known
Population Mean: Unknown
Developing Null and Alternative Hypotheses
Context specified
Sample selection and based conclusion
Qs to be asked:
What is the purpose of collecting the sample?
Conclusions hoping to make?
H 0: 0 H 0: 0 H 0: 0
H a: 0 H a: 0 H a: 0
Ha – what to establish ?
Examples
The manager of the Danvers-Hilton Resort Hotel stated that the mean
guest bill for a weekend is $600 or less. A member of the hotel’s
accounting staff noticed that the total charges for guest bills have been
increasing in recent months. The accountant will use a sample of future
weekend guest bills to test the manager’s claim. a. Which form of the
hypotheses should be used to test the manager’s claim? Explain.
a. H0: µ <=14
Ha: µ > 14 Research hypothesis
b. There is no statistical evidence that the new bonus plan increases sales
volume.
c. The research hypothesis that µ > 14 is supported. We can conclude that
the new bonus plan increases the mean sales volume.
Examples
A production line operation is designed to fill cartons with laundry detergent
to a mean weight of 32 ounces. A sample of cartons is periodically selected
and weighed to determine whether underfilling or overfilling is occurring. If
the sample data lead to a conclusion of underfilling or overfilling, the
production line will be shut down and adjusted to obtain proper filling.
a. Formulate the null and alternative hypotheses that will help in deciding
whether to shut down and adjust the production line.
b. Comment on the conclusion and the decision when H0 cannot be rejected.
c. Comment on the conclusion and the decision when H0 can be rejected.
b. There is no evidence that the production line is not operating properly. Allow the
production process to continue.
c. Conclude µ ≠ 32 and that overfilling or underfilling exists. Shut down and adjust the
production line.
Null and Alternative Hypotheses
Population Condition
H0 True H0 False
Conclusion ( < 12) ( > 12)
Accept H0 Correct
Type II Error
(Conclude < 12) Decision
Reject H0 Correct
Type I Error Decision
(Conclude > 12)
Examples
Duke Energy reported that the cost of electricity for an efficient home in a
particular neighborhood of Cincinnati, Ohio, was $104 per month ( Home
Energy Report, Duke Energy, March 2012). A researcher believes that the
cost of electricity for a comparable neighborhood in Chicago, Illinois, is
higher. A sample of homes in this Chicago neighborhood will be taken
and the sample mean monthly cost of electricity will be used to test the
following null and alternative hypotheses.
a. Assume the sample data led to rejection of the null hypothesis. What
would be your conclusion about the cost of electricity in the Chicago
neighborhood?
Conclude that the population mean monthly cost of electricity in the Chicago
neighborhood is greater than $104 and hence higher than in the
comparable neighborhood in Cincinnati.
b. What is the Type I error in this situation? What are the
consequences of making this error?
The Type I error is rejecting H0 when it is true. This error occurs
if the researcher concludes that the population mean monthly
cost of electricity is greater than $104 in the Chicago
neighborhood when the population mean cost is actually less
than or equal to $104.
H0: 220
Ha: < 220
b. Claiming < 220 when the new method does not lower costs. A mistake
could be implementing the method when it does not help.
c. Concluding 220 when the method really would lower costs. This could
lead to not implementing a method that would lower costs.
Hilltop coffee
H0: µ>=3
Ha: µ<3
Do not reject H0
Reject H0
Sample study
n=36 , If mean less than 36
How much less than 3 pounds must the average be before
declaring difference as significant.
Key factor value the decision maker places for alpha :Level of
significance is important – prob. of making a type I error when the
H0 is true as an equality.
“If the company is meeting its weight specifications at μ = 3, I do not want to
take action against them. But, I am willing to risk a 1% chance of making such
an error.”
Defining alpha :
From the director’s statement, we set the level of significance for the
hypothesis test at α = .01. Thus, we must design the hypothesis test so that the
probability of making a Type I error when μ =3 is .01.
= .10 Sampling
distribution
x 0
of z
/ n
p-value
z
z = -z = 0
-1.46 -1.28
Upper-Tailed Test About a Population Mean:
Known
p-Value Approach p-Value < ,
so reject H0.
Sampling
distribution
x 0 = .04
of z
/ n
p-Value
z
0 z = z=
1.75 2.29
Critical Value Approach to
One-Tailed Hypothesis Testing
The test statistic z has a standard normal probability
distribution.
We can use the standard normal probability
distribution table to find the z-value with an area
of in the lower (or upper) tail of the distribution.
The value of the test statistic that established the
boundary of the rejection region is called the
critical value for the test.
The rejection rule is:
• Lower tail: Reject H if z < -z
0
• Upper tail: Reject H if z > z
0
Lower-Tailed Test About a Population Mean:
Known
Critical Value Approach
Sampling
distribution
x 0
of z
Reject H0 / n
Do Not Reject H0
z
z = 1.28 0
Upper-Tailed Test About a Population Mean:
Known
Critical Value Approach
Sampling
distribution
x 0
of z
/ n Reject H0
Do Not Reject H0
z
0 z = 1.645
Steps of Hypothesis Testing
p-Value Approach
Step 4. Use the value of the test statistic to compute the
p-value.
Step 5. Reject H0 if p-value < .
Step 6. Interpret the statistical conclusion in the context
of the application .
Steps of Hypothesis Testing
Sampling
distribution = .05
x 0
of z
/ n
p-value
z
0 z = z=
1.645 2.47
One-Tailed Tests About a Population Mean:
Known
Critical Value Approach
1/2 1/2
p -value p -value
= .0031 = .0031
/2 = /2 =
.015 .015
z
z = -2.74 0 z = 2.74
-z/2 = -2.17 z/2 = 2.17
Two-Tailed Tests About a Population Mean:
Known Glow
Critical Value Approach
Sampling
distribution
x 0
of z
/ n
z
-2.17 0 2.17
Confidence Interval Approach to
Two-Tailed Tests About a Population Mean
Confidence Interval Approach to
Two-Tailed Tests About a Population Mean
Glow
The 97% confidence interval for is
x z / 2 6.1 2.17(.2 30 ) 6.1 .07924
n 0.97+0.015=
or 6.02076 to 6.17924 0.9850
Because the hypothesized value for the
population mean, 0 = 6, is not in this interval,
the hypothesis-testing conclusion is that the
null hypothesis, H0: = 6, can be rejected.
Tests About a Population Mean:
Unknown
Test Statistic
x 0
t
s/ n
Hypothesized value 7
Sample mean 7.25
Sample size 60
Sample std. dev. 1.052
= 1.052/ sqrt (60)
standard error 0.135812616
T VALUE FOR N-1 DF 1.840771552
α = .05 as the level of significance
for the test.
which is less than the alpha value
p value T.DIST.RT(1.841,59) 0.035342554 of 0.05
Heathrow should be classified as a
Conclusion Reject the H0 superior service airport.
Example: Highway Patrol
H0: < 65
Reject H0
Do Not Reject H0
t
0 t =
1.669
Holiday toys
Prior to making the final production decision based upon this estimate,
Holiday decided to survey a sample of 25 retailers in order to develop
more information about the demand for the new product. Each retailer
was provided with information about the features of the new toy along
with the cost and the suggested selling price. Then each retailer was
asked to specify an anticipated order quantity.
Hypothesis testing
α 0.025 0.025 0.05
H 0 : p p0 H 0 : p p0 H 0 : p p0
H a : p p0 H a : p p0 H a : p p0
One-tailed One-tailed Two-tailed
(lower tail) (upper tail)
Tests About a Population Proportion
Test Statistic
p p0
z
p
where:
p0 (1 p0 )
p
n
p 0 (1 p 0 ) .5(1 .5)
p .045644
a common n 120
error is using p p 0 (67 / 120) .5
p in this z 1.28
formula p .045644
Two-Tailed Test About a
Population Proportion
pValue Approach
Because 1.278 > -1.96 and < 1.96, we cannot reject H0.
NORM.S.INV(0.025) -1.959963985