Instruction 10-5
A buyer for a manufacturing plant suspects that his primary supplier of raw materials is overcharging. In order to determine if his suspicion is correct, he contacts a second supplier and asks for the prices on similar various materials. He wants to compare these prices with those of his primary supplier. The data collected is presented in the table below, with some summary statistics presented (all of these might not be necessary to answer the questions which follow). The buyer believes that the differences are normally distributed and will use this sample to perform an appropriate test at a level of significance of 0.01.
$\begin{array}{llll}
\text {Material}&\text {Primary Supplier}&\text {Secondary}&\text {Difference}\
&&\text { Supplier }\
1 & \$ 55 & \$ 45 & \$ 10 \
2 & \$ 48 & \$ 47 & \$ 1 \
3 & \$ 31 & \$ 32 & -\$ 1 \
4 & \$ 83 & \$ 77 & \$ 6 \
5 & \$ 37 & \$ 37 & \$ 0 \
6 & \$ 55 & \$ 54 & \$ 1 \
\hline \text { Sum: } & \$ 309 & \$ 292 & \$ 17 \
\text { Sum of Squares: } & \$ 17,573 & \$ 15,472 & \$ 139
\end{array}$

-Referring to Instruction 10-5,the buyer should decide that the primary supplier is
A) not overcharging because there is strong evidence to prove otherwise.
B) not overcharging because there is insufficient evidence to prove otherwise.
C) overcharging because there is strong evidence that this is the case.
D) overcharging because there is insufficient evidence to prove otherwise.

Question

Instruction 10-5
A buyer for a manufacturing plant suspects that his primary supplier of raw materials is overcharging. In order to determine if his suspicion is correct, he contacts a second supplier and asks for the prices on similar various materials. He wants to compare these prices with those of his primary supplier. The data collected is presented in the table below, with some summary statistics presented (all of these might not be necessary to answer the questions which follow). The buyer believes that the differences are normally distributed and will use this sample to perform an appropriate test at a level of significance of 0.01.
 $\begin{array}{llll}
\text {Material}&\text {Primary Supplier}&\text {Secondary}&\text {Difference}\
&&\text { Supplier }\ 
1 & \$ 55 & \$ 45 & \$ 10 \
2 & \$ 48 & \$ 47 & \$ 1 \
3 & \$ 31 & \$ 32 & -\$ 1 \
4 & \$ 83 & \$ 77 & \$ 6 \
5 & \$ 37 & \$ 37 & \$ 0 \
6 & \$ 55 & \$ 54 & \$ 1 \
\hline \text { Sum: } & \$ 309 & \$ 292 & \$ 17 \
\text { Sum of Squares: } & \$ 17,573 & \$ 15,472 & \$ 139
\end{array}$

-Referring to Instruction 10-5,the buyer should decide that the primary supplier is
A) not overcharging because there is strong evidence to prove otherwise.
B) not overcharging because there is insufficient evidence to prove otherwise.
C) overcharging because there is strong evidence that this is the case.
D) overcharging because there is insufficient evidence to prove otherwise.

Quizplus · Accepted Answer

The decision to conclude that the primary supplier is not overcharging is based on the lack of strong evidence to prove that they are overcharging. Given the context, the buyer is using a statistical test (likely a t-test for the mean difference) at a significance level of 0.01. Without specific test results provided, the correct choice is based on the premise that if there was strong evidence of overcharging, it would be indicated by significant statistical results. Since the question suggests using this sample to perform an appropriate test and does not provide conclusive evidence of overcharging, it implies that there is insufficient evidence to prove the primary supplier is overcharging.

Instruction 10-5 a Buyer for a Manufacturing Plant Suspects That

Instruction 10-5
a Buyer for a Manufacturing Plant Suspects That