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Words 362

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Typically, these hypotheses will be stated in terms of a parameter.

A test of hypothesis is a statistical procedure used to make a decision about the conjectured value of a parameter.

We will make our decision based on observed values of a statistic. * The purpose of hypothesis testing is to determine whether there is enough statistical evidence in favor of a certain belief about a parameter. * There are two hypotheses which we are comparing. * The null hypothesis, H0, specifies a value of a parameter. This hypothesis is assumed to be true, and the collected data will be analyzed to see if it is contradictory to the null hypothesis. * The alternative hypothesis, Ha, gives an opposing statement about the value of the parameter. The collected data will be analyzed to see if it supports the alternative hypothesis.

Example:

* An operation manager needs to determine if the mean demand during lead time is greater than 350. * If so, changes in the ordering policy are needed.

There are two hypotheses about a population mean: * H0: The null hypothesis m = 350 * Ha: The alternative hypothesis m > 350 Decision Rule: This tells us when we feel the observed data provided sufficient evident to conclude the alternative hypothesis is true.

It will be phrased as: Accept the alternative hypothesis when the p-value of the test is less than a.

Steps of the Test of Hypothesis 1. Identify the null and alternative hypotheses 2. Give the decision rule 3. Identify the form of the test statistic and calculate it based on the sampled data. 4. Verify the method is valid (n is at least 30 for now) 5. Calculate the p-value based on the z-score and Ha 6. Give an interpretation.

Example

If:

H0: m = $122,000

Ha: m < $122,000 n =…...

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