A Manufacturer of Stereo Equipment Introduces New Models in the Fall

A manufacturer of stereo equipment introduces new models in the fall. Retail dealers are surveyed
Immediately after the Christmas selling season regarding their stock on hand of each piece of
Equipment. It has been discovered that unless 40% of the new equipment ordered by the retailers
In the fall had been sold by Christmas, immediate production cutbacks are needed. The
Manufacturer has found that contacting all of the dealers after Christmas by mail is frustrating as
Many of them never respond. This year 80 dealers were selected at random and telephoned
Regarding a new receiver. It was discovered that 38% of those receivers had been sold. Since 38%
Is less than 40%, does this mean that immediate production cutbacks are needed or can this
Difference of 2 percentage points be attributed to sampling? Test at the 0.05 level.
Computed z = -0.37.

A) Cut back production
B) Do not cut back production
C) Cannot determine based on information given