Easy Tax is a service company that prepares tax returns. An outside auditor has examined 20 samples each containing one completed tax return. Consider a service process that completes tax returns. An auditor has taken 20 samples of samples containing one completed tax return. The total number of defects observed over the 20 samples is 200. The LCL for the control chart constructed using three sigma is
A) -1.6
B) 0.4
C) 3.3
D) 6.5

Question

Quizplus · Accepted Answer

The LCL (Lower Control Limit) for a control chart is calculated using the formula: LCL = p̄ - 3√(p̄(1-p̄)/n), where p̄ is the average proportion of defects and n is the sample size. Here, p̄ = 200 defects / 20 samples = 10 defects per sample. Since each sample is one tax return, n = 1. Thus, LCL = 10 - 3√(10(1-10)/1) = 0.4.

Easy Tax Is a Service Company That Prepares Tax Returns