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

Question

Quizplus · Accepted Answer

The computed z-value of -0.37 is not significant at the 0.05 level, meaning that the difference between the sample proportion of 0.38 and the threshold of 0.40 could be due to sampling variability. Therefore, it is not necessary to cut back production based on this sample result.

A Manufacturer of Stereo Equipment Introduces New Models in the Fall